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.
Following for Prime Minister.
My Circular M.140. 
Possible denunciation of Commercial Treaty  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.  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.
 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.  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
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  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.