Reference my telegram 123. [1]

I had long conversation with Welles. [2] I discussed with him gist
of Bruce's telegram of 14th June. [3] He agrees that it is
probable that Hitler will propose terms of peace with France at
early date. His expectation is that such terms would be relatively
easy and that section of British people might thereupon start move
for Britain to take initiative in attempt to come to some
reasonable terms with Germany. He thinks that any terms Hitler
offered would not be easy terms but would be such that they could
not or at least should not be accepted.

He believes we should all be thinking now on tentative lines of
reply to any peace proposals that Hitler might conceivably make
jointly to France and Britain, and he agrees that it would be
extremely useful if general lines of any such proposed reply or
replies could be made available to the President [4] beforehand to
be approved instead of getting President's subsequent endorsement
of them. [5] On my enquiring what would happen to French fleet if
France were to give in, he said that he hoped and believed French
fleet would be put under command of British Admiralty before
France gave in and so would not be a factor in any French peace
negotiations. He said he believed this was absolutely essential
and that he believed it would come about. He expressed great faith
in Commander-in-Chief of French Navy. [6]

On my enquiring as to his estimate of American public opinion he
said that it was still moving quite rapidly but that he believed
it to be essential that Britain and France should continue to
resist to the utmost, because otherwise the point might be reached
by American public opinion when they might say to themselves that
American assistance unfortunately would be too late and could do
no good.

I asked whether any orders for French and for British large naval
shells had been placed in this country, because it appeared to me
essential that if worst came to worst French and/or British navies
should have sources of ammunition supply outside their own
countries. He telephoned United States Navy Office, who replied
that they believed no such orders had been placed but they would
check this positively.

I said if French were to crack, I believed it would save a great
deal of time if gauge and converting fixtures for large French
naval shells could be salvaged and brought to this country, and
this would save much time in subsequent manufacturing appropriate
shells here.

At this stage I said I had been exercising my imagination in
attempt to put down briefly on paper something that might possibly
be helpful as a statement to be made by President. He asked if he
could see it and [I] then handed him copy of following statement-
(begins)
Until this moment United States has maintained policy of non
belligerency. At the same time it has been impossible to hide the
fact that the vast bulk of personal opinion in this country has
been actively sympathetic with Allied cause. Whilst this is so
bulk of public opinion in this country has believed vital American
interests have not been affected-however they may have been
menaced by threat of situations that might arise in the future. I
believe the situation has now advanced beyond this point. I
believe that the shadow of events to come has been thrown across
this continent-and across continent of South America for which we
are in a sense trustees. If we fail at this moment to express
ourselves, we will be recreants to our trust. However we do not
declare war-but we state in most categorical terms that vital
interests of United States demand that naval bases from which
North America and South America might be directly threatened do
not pass into hands of any power or powers whose interest and
intentions are clearly hostile to the Americans (ends).

He said this was very interesting and asked whether he might keep
a copy to which I of course agreed.

I said I would not discuss Australia's position at this interview.

He said he appreciated that there was nothing that he could say in
this connection at present but that 'we might have to discuss this
together before very long'. [7]

CASEY