40 Lord Cranborne, U.K. Secretary of State for Dominion Affairs, to Sir Ronald Cross, U.K. High Commissioner in Australia
Circular Cablegram Z258 LONDON, 12 August 1941, 5.10 p.m.
Please give the following message to the Prime Minister  for his most secret and personal information.
Following quotation from message received from Prime Minister  reporting his talks with President Roosevelt about Japan:-
Position about Japan is as follows.
President proposed to Japan some time ago the neutralization of Indo-China and Thailand under joint guarantee of the United States, Japan, Britain, China, and others. Japanese reply, which will -be cabled to you fully as soon as more urgent messages have been dealt with, agrees to principle of no encroachment upon Siam and military withdrawal from Indo-China but adds a number of conditions fundamentally unacceptable. 
For instance withdrawal to take place after China incident is settled, meaning thereby after Chiang Kai-shek  is strangled, and further requiring the recognition of Japan's preponderant position in these regions; also requiring the United States to abstain from all further military preparations in these regions and reasonable lifting of economic sanctions.
The President's idea is to negotiate about the unacceptable conditions and thus procure a moratorium of say 30 days in which we may improve our position in Singapore area and Japanese will have to stand still. But he will make it a condition that the Japanese meanwhile encroach no further and do not use Indo-China as a base for an attack in China. He will also maintain in full force economic measures directed against Japan. These negotiations show little chance of succeeding but the President considers that a month gained will be valuable. I pointed out, of course, that Japan would double-cross him and would try to attack China or cut Burma communications. However you may take it that they consider it right [regardless]  to begin negotiations on these lines and in view of what has passed between the United States and Japan it will be necessary to accept this fact.
In the course of these negotiations the President would renew his proposals for the neutralization of Siam as well as Indo-China.
At the end of the note which the President will hand to the Japanese Ambassador  when he returns from his cruise in about a week's time he will add the following passage which is taken from my draft. Any further encroachment by Japan in the South-West Pacific would produce situation in which the United States Government would be compelled to take counter measures, even though these might lead to war between the United States and Japan. He would also add something to the effect that it was obvious, the Soviet being a friendly power, that the United States Government would be similarly interested in any similar conflict in the North-West Pacific. QUOTATIONS ENDS.
We feel sure that you will agree with us in thinking that the course outlined marks a great advance on the line which we have long wanted to see towards arresting Japanese aggression by united force. ENDS.