In the temporary absence of the British Ambassador  from Washington, Secretary of State  sent for British Minister  today. Owing to his inability to see representatives of all interested Governments, Secretary of State asked British Minister to inform me and Netherlands Minister  of what he had to say.
By reason of its importance I repeat here terms of the message which the British Minister is telegraphing to London tonight.
(1) Mr. Hull sent for me this afternoon to inform me of the present position of the conversations with the Japanese. Before beginning he asked me to request that what he told me would not be sent by you to any other post and would be distributed only to one or two of the highest officials in the Foreign Office.
(2) After recapitulating the history of these conversations, their interruption by Japanese action in Indo-China, their resumption with Konoye's  message to the President  and re-emphasising their exploratory character and United States Government stand on basic principles, he said that Kurusu  had expressed great anxiety to avert a clash of arms but had said that the opinion in Japan was such that an explosion might occur if agreement between the two Governments could not be reached.
Mr. Hull had in turn stated the anxiety of the United States Government to avoid war, but had laid stress on principles which the United States Government could not abandon. In the first place there could be no hitch-up [without having]  peaceful settlement between United States and Japan and Axis. If Japan had any different ideas on this point he could tell them that they would not get six inches in a thousand years with United States Government who would not have anything to do with the greatest butcher in history. In the second place Japan must withdraw her troops from China. United States could not find a basis for negotiation of a general settlement unless this was done. Kurusu said Japanese opinion was such that the Government could not do this at any rate at once and Japan would have to keep some troops in China. Secretary of State said in that case no agreement could be reached on this point. Thirdly there was the question of Japanese commercial policy. No agreement had been possible on this point.
(3) Mr. Hull said Kurusu had been 'in a great state' over the breakdown on all these three points and had asked whether there was not some way round the difficulty. Could not some means be found of giving Japanese Government time to educate public opinion away from its present state of mind towards one in which basis of negotiations with United States would be possible? For instance if Japanese were now to withdraw their troops from Indo-China could United States Government and other countries concerned ease their economic pressure to point of sending small quantities of rice and oil, far below full requirements of Japan, Japanese guaranteeing that nothing would find its way to the Japanese forces? Mr. Hull replied that he was ready to think whether this suggestion was attractive enough to warrant it being even considered.  (4) Japanese were now communicating with their Government. In the meantime Secretary of State wished to inform you of the position reached in case you desired to make any comments.
(5) Chinese Ambassador  was received just after me. I saw him afterwards. He had received similar information and expressed satisfaction over position taken by Mr. Hull.