Repeated to Washington No. 13, London 13.

Situation. Since my telegram No. 62 [1] press attacks on United
States have continued until the last few days when there has been
a lessening possibly in an attempt to create a better atmosphere
for Nomura's [2] arrival. Statement of Dutch Minister [3]
(telegram No. 68 [4]) brought series of threatening articles on
Netherlands East Indies.

You have no doubt had from London Foreign Office appreciation of
situation in Far East. Some who are in a position to know believe
that something is brewing here and the United States Ambassador
[5] tells me that after many conversations with the Minister for
Foreign Affairs [6] he is firmly of the opinion that Japan is
'headed straight for war with United States'. He agreed that the
state of the internal situation and economic conditions and the
strain of war with China logically would lead to the contrary
conclusion. Nevertheless he is of opinion that the extremist army
element is not affected by these considerations and that it is
resolved upon war with the United States in order to establish the
proper position of Japan in the world. He said that the United
States could not possibly allow Japan to dominate Singapore. I
communicate these statements rather because his views will
possibly be of assistance at Washington than because I think they
can be completely justified.

Latest disquieting development is Japanese campaign against the
Chinese on the Hong Kong borders, for which they seem to be
landing unnecessarily large forces. On the other hand I have
reports of increased tendency in certain official quarters here to
meet both British and Americans in a friendly way. I took the
opportunity of suggesting to the French Ambassador [7] and the
Thai Minister [8] that Japan, acting for the first time in her
history as a mediator [9], would probably seek some gain for
herself out of what is already represented as a great diplomatic
triumph. They appreciated the warning and said that they would be
on their guard; both are personally very suspicious of the
Japanese.

The border conference is attracting great attention and several
newspapers contain almost identical articles making the following
points:

Japan should use the conference:

(1) to secure undisputed position as leader of East Asia:

(2) to secure recognition of the policy of the mutual prosperity
sphere:

(3) to exclude British and American influence:

(4) to develop race consciousness in the Straits Settlements and
Netherlands East Indies:

(5) to give warning to the Netherlands East Indies of the danger
of non-cooperation:

(6) generally to eliminate the White peril from Asia.

In spite of the circumstances of the situation set out in the
Foreign Office appreciation, I have doubts whether any specific
immediate co-operation with Germany is in view. I think that it is
a conceded probability that consideration of any such move will
await reports from Nomura in Washington and from Oshima [10]-
incidentally he has reached Berlin.

In the circumstances I can only watch and report developments and
be ready for emergencies. (My telegram No. 59. [11]) I rely on you
to keep the Chancery [12] fully informed from your end.

LATHAM