War Cabinet discussion  followed on these lines.
(Begins):Churchill said that early in August it had been thought that Japan might match immediately into Thailand, but so far she had not done so. He recalled that the Japanese situation had been discussed at the Atlantic Conference when President Roosevelt had undertaken:-
(a) to endeavour to gain time;
(b) to warn Japan that she would come up against the United States in the event of her marching into Thailand.
I said that in all four contingencies (Russia, Kunming, N.E.I. and Thailand) the initiative lay with Japan and we might have to take the field against her. Immediate action required was therefore to ensure that we had sufficient forces available in the Far East to act as a deterrent.
The First Sea Lord  gave a review of the naval position.
Dealing first with the battle of the Atlantic, he said that German U-boats were now working right across the whole ocean. At one time we had thought that after Americans had assumed responsibility for defence contingencies of half the Atlantic, German U-boats would not operate in that sphere. We [now]  had some indication that, while German U-boats would not take aggressive action against United States warships, except to facilitate their own escape, there was no sign that they would not attack convoys in this area.
At one time we had hoped we should be able to bring back all our corvettes from the other side of the Atlantic. Under present arrangements, however, we retained the responsibility for S.C.
Convoys.  We had therefore to keep some destroyers and corvettes already based at Canadian ports.
U-boats' present tactics were that some of them operated independently, and others in large groups. Those acting independently gave notice of movements of our convoys to larger groups. Attacks were made at night, at considerable range, after which U-boats made away from the convoy. It was therefore difficult to establish contact with them in order to attack them.
This was being dealt with by the fitting of new apparatus.
Air menace to our convoys had diminished, owing mainly to a greater number of guns mounted on our merchant vessels and to our improved shooting. Focke Wulf and other long-distance aircraft now tended to confine themselves to reconnaissance duties.
Enemy attacks on east-coast convoys continued, especially at full moon. Our anti-aircraft gunners were now bringing more down. Mine menace continued, but the situation was in hand. We were always expecting to have to face a new type of mine. But our scientific advisers thought they knew the lines of possible future developments.
Raider Situation. The Germans had normally from one to three raiders out. They had not caused much damage lately.
Destroyer Escorts. All destroyers not required for service with fleets were fully employed in escort duty. He hoped the Australian Government would agree to their four destroyers lately in the Mediterranean joining the Far Eastern Fleet after complete refit in Australia.
The cruiser situation was pretty tight owing to demands of escorts for convoys.
Far Eastern Situation. The First Sea Lord was asked to explain what the position would be if we find ourselves at war with Japan before Christmas, the United States remaining neutral. He saw that in the absence of a threat from the United States Pacific Fleet, Japanese would be able to move southward a much stronger capital ship force than we could assemble in Far Eastern waters. By January/February, 1942, our Far East Battle Fleet would be composed of:-PRINCE OF WALES, a battle cruiser (REPULSE or RENOWN), 4 R Class capital ships (RESOLUTION, RAMILLIES, REVENGE and ROYAL SOVEREIGN).
The United States authorities were showing signs of adopting views of a more forward policy. There were many people in America who thought that they ought to send capital ships to join our Fleet at Singapore. For the moment, however, Americans still adhere to the policy of maintaining their main fleet at Hawaii. They were, however, taking steps to strengthen their fleet in the Philippines. They had already undertaken to send nine destroyers and twelve submarines to work with the 'Eastern Fleet' in the event of their coming in. The Philippines were now an American submarine base, and defences there were being strengthened.
A complete understanding had not yet been reached as a result of our conversations with the United States Naval Authorities. They held that we ought to hold 'Malay Barrier' in the event of war with Japan. This had been out of the question with the forces hitherto available to us in the Far East, but adoption of American [Plan 5] had eased the position in the Atlantic and had enabled us to decide on the strengthening of our Far East Naval Forces. We were to hold further Naval conversations in the Far East with Americans in December. These would be followed by joint conversations with the Americans and Dutch.
The United States Naval Staff contended that it was unnecessary to maintain so many Australian and New Zealand cruisers in Australian and New Zealand waters. It was possible that the Dominion Governments had over-estimated the raider menace in those waters.
Some compromise between the two views might well be arrived at.
Air Situation. The Chief of the Air Staff 5 gave an appreciation of the air situation in the Far East. Our idea was to maintain some 3 30 aircraft at Singapore. We had now about 200 there. He understood that Sir Earle Page agreed that this was [an] adequate [garrison for] defence purposes, but would like to see a powerful striking force added. We share that view and wish to give effect to it as soon as possible. United States had sent thirty heavy bombers to Manila. It was understood that thirty-five more would follow next year. Manila was, of course, more central and strategically situated than Singapore.
If it became necessary to reinforce Singapore by medium bombers, this could only be done at the expense of the Middle East. Medium bombers would have to be flown out, and we were already sending out as big reinforcements via Gibraltar and Malta as this route could carry.
If a situation in the Far East arose in which it was necessary to send the Fleet from the Middle East to the Far East, there was no doubt that we should also send bombers from the Middle East to the Far East theatre. This journey could be done by air. Broadly, the situation was that in the absence of extreme danger in the Far East, it was uneconomical to employ, simply in a precautionary role, bombers now being used to attack targets in Germany and in the Middle East.
In reply to a question, the Chief of the Air Staff said that Liberator 2 aircraft, if to be used as day bombers, could not be sent direct from America to the Far East. They had to go via the United Kingdom where they were fitted with turrets. We should get no more Flying Fortresses from the United States until 1942.
Military Forces. The Chief of the Imperial General Staff  said that the Garrison of Singapore was something over 63,000 together with 14,000 volunteers. In addition to heavy fixed defences of the fortress, there were over 200 anti-aircraft guns there. There were, however, shortages in field and anti-tank guns.
Churchill thanked me very cordially for my statement which would be most fully considered by the Chiefs of Staff. The United Kingdom were resolute to help Australia if she were menaced with invasion, but I would recognise that it would be a grave strategic error to move forces to the Far East-possibly to remain inactive for a year-which were now actively engaged against the Germans and Italians. Our correct strategy was to move our strength from theatre to theatre as the situation changed. At the present time, the theatre in which the forces could be most profitably employed was the Middle East. A policy of spreading our resources to guard against possible but unlikely dangers may be fatal.
What was the best deterrent to employ against the Japanese? In his view, the answer was to maintain a stiff attitude towards her, but not to become involved in war with her unless we had the assurance of the United States participation. There were four situations which we had to contemplate in the Far East:-
(1) United States at war with Germany, and Japan neutral;
(2) United States in the war with us, and Japan at war with the United States and us;
(3) Both countries out of the war;
(4) United States out of the war, but Japan in against us.
The fourth possibility was clearly the most unfavourable, and the one which we should at all costs avoid. But the whole position was too complex to be dealt with on the basis of any rigid formula and he hoped that they might be allowed some latitude in handling the matter. We had to watch the situation from week to week and from month to month, and to deal with it as best we could.
Churchill said that he was not one of those who believed that it was in Japan's power to invade Australia. Nevertheless, he would renew his assurance that if Australia were gravely threatened, we should [cut] our losses in the Middle East and move in great strength to Australia's assistance. Such a decision, however, was not one to be taken lightly. Churchill went on to refer to the difficulties which faced President Roosevelt as a result of [the slow development of American] opinion and the peculiarities of American Constitution. Nobody but Congress could declare war. It was, however, in the President's power to make war without declaring it.
President Roosevelt was a great leader. In the last twelve months American opinion had moved under his leadership to an extent which nobody could have anticipated. They had made immense credits available to us; they had made immense resources available to us under Lease Lend; their Navy was escorting Atlantic convoys; and finally they were taking a firm line with the Japanese.
Churchill then referred to the series of personal telegrams which the President and he had exchanged since the beginning of the War.
This exchange of views continued down to the present moment, but it would be a great error on his part to press the President to act in advance of American opinion. The difference between the two countries in a nutshell was that he, Churchill, had it in his power, with the approval of War Cabinet, to go to Mansion House and say 'Should the United States become involved in war with Japan, the British declaration will follow within an hour.'  The American President had no such power and it remained possible, though unlikely, that [United States] would disinterest themselves if we were to declare war on Japan. Very likely, developments in America might become more rapid after the repeal of the Neutrality Act.
In conclusion, Churchill said that we were in [the] difficulty [that] the R.A.F. expansion programme fell short both of our expectations and our needs. My suggestions would all be most carefully considered. The War Cabinet would hold themselves in readiness to assist me while I was in this country. If I wished for another exchange of views, a special meeting could be held at any time.