CANBERRA, 16 July 1941
Following for the Secretary of State for Dominion Affairs. 
Reference your M.151. 
We have given careful consideration to your views but we are not
convinced that your proposed course of action is correct.
In paragraph (2) you refer to denunciation as something which
would 'afford unmistakable evidence of our reactions' and again
that 'the psychological effects on Japan would be great'.
At the same time, in paragraph (3), you appear to accept the
Canadian view that denunciation should not be represented as a
reprisal and that it should be based on commercial grounds. We
cannot reconcile these two things.
We think that the denunciation would plainly be regarded by all
parties as a reprisal and as a pretty ineffective one. We see no
value in economic measures against Japan which are merely
pinpricks and do not exercise a material influence upon Japanese
economy, and through it Japanese policy. That is why we suggested
that if economic action was envisaged as reprisal it should take
the form of severe restrictions on imports from Japan by all
countries. Such action would, on our latest information, fit in
very well with what the U.S.A. proposes to do in the same event.
If and when Japan makes anticipated move into Indo-China, whether
such move be with or without the concurrence of Vichy, then
following steps would in our opinion be appropriate:-
(a) Immediate denunciation of Treaty  without attempt at
justification on commercial grounds;
(b) The denunciation to be followed as quickly as possible by
intensified import and export restrictions or complete economic
embargo subject in either case to the United States being prepared
to act concurrently with us.
We would of course be most happy to consider any further argument
you might care to advance but frankly we are not convinced by
those adduced in the cable under reply.
1 Repeated to the N.Z. Acting Prime Minister on 17 July as no.
2 Lord Cranborne.
3 Document 7. A further circular cablegram from Cranborne (M156 of
15 July on file AA : A981, Far East 20B, i) had urged a 'most
immediate reply' from the Commonwealth Govt on the course of
action recommended in circular cablegram M151.
4 The 1911 Anglo-Japanese Treaty of Commerce and Navigation.
[AA : A3196, 1941, 0.9889]