7 Lord Cranborne, U.K. Secretary of State for Dominion Affairs, to Mr R. G. Menzies, Prime Minister

Circular cablegram M151 LONDON, 12 July 1941, 11.51 p.m.

MOST SECRET

Following for Prime Minister.

My Circular M.140. [1]

JAPAN

Possible denunciation of Commercial Treaty [2] in the event of

further southward movement by Japan was one of the suggestions

upon which the views of Dominion Governments were invited in my

telegram D.182 of April 5th. [3] Main points made in the replies

received to those suggestions were: -

(1) The importance of suiting the action to the circumstances as

they arise and avoiding provocative measures which might do more

harm than good.

(2) The importance of securing United States co-operation in any

retaliatory measures which might be contemplated.

As regards the Commercial Treaty the general view expressed was

that in the circumstances envisaged, denunciation might have

little to commend development [sic] except from the point of view

of bringing us into line with the United States. The Canadian

Government for their part expressed doubts as to the wisdom of

such action if taken as a reprisal and suggested that it might be

preferable if notice of termination could be given in a moment of

comparative calm. The Commonwealth Government felt that there was

some risk of denunciation being regarded as an irritant and

suggested that counter action in the economic sphere could more

effectively be provided by the adoption of joint policy of import

restrictions in co-operation with the United States Government.

[4] Alternatively the suggestion put forward in my telegram that

the situation might best be met by placing Mitsui, Mitsubishi or

Okura on the Black or Statutory List was felt to have [sic] rise

to strong objections at least as far as the two former companies

are concerned and was generally viewed with disfavour.

(2) We have given most careful consideration to these views and

suggestions of re-examining possible courses of action open to us.

In deciding to recommend denunciation of the Commercial Treaty

notwithstanding doubts previously expressed, we have been

influenced by the manner in which the situation has developed in

the last few months and by the need for meeting any further

Japanese move by a measure which could both be put into effect

without delay and would at the same time afford unmistakable

evidence of our reactions. We fully recognise that the practical

importance of this step would be small but do not consider that it

could be regarded as provocative. On the other hand we have reason

to believe that the psychological effects in Japan would be

greater and would bring home especially to the trading community

the perils of bad leadership. This has also been the opinion of

His Majesty's Ambassador at Tokyo. [5] We further consider it most

important to bring ourselves fully into line with the United

States in this matter.

(3) We very much hope therefore that on reconsideration His

Majesty's Governments in the Dominions will feel able to concur in

our taking this step as soon as the moment is judged opportune.

Although we should wish to proceed with denunciation of the treaty

at very short interval after the Japanese move into Southern Indo-

China we agree with the view previously expressed by the Canadian

Government that it should not be represented as a reprisal and

would propose that notice should be based on the grounds that

Japanese restrictions on British trade and changing conditions

have made continuation of the treaty pointless.

(4) A very early reply would be appreciated since the latest

indications are that the Japanese move may be imminent. As to the

general United States attitude please see my circular M.149 of

today. [6]

In the meantime we are further exploring the possibilities in the

direction of import restrictions as suggested by the Commonwealth

Government but the matter is complicated by the varying conditions

of parts of the Empire and it is clear that the preparation of

suitable scheme would not [be?] free from difficulty. His

Majesty's Ambassador at Washington [7] is however being asked to

elicit view of United States authorities as to the prospects of

their being able to co-operate in this field.

1 Dispatched 9 July. On file AA : A1608, A41/1/6, v.

2 The 1911 Anglo-Japanese Treaty of Commerce and Navigation.

3 Documents on Australian Foreign Policy 1937-49, vol. IV,

Document 386.

4 See ibid., Document 453.

5 Sir Robert Craigie.

6 Document 6.

7 Lord Halifax.

[AA : A981, FAR EAST 20B, i]