Documents Relating to New Zealand's Participation in the Second World War 1939–45: Volume III
27 — The Secretary of State for Dominion Affairs to the acting Prime Minister of New Zealand
The Secretary of State for Dominion Affairs to the acting Prime Minister of New Zealand
My Circular telegram of 9 July. Japan.
The possible denunciation of the Commercial Treaty in the event of a further southward move by Japan was one of the suggestions page 37 upon which the views of Dominion Governments were invited in my telegram of 5 April [No. 22]. The main points made in the replies received to those suggestions were (i) the importance of suiting action to the circumstances as they arise and avoiding provocative measures which might do more harm than good; (ii) the importance of securing United States co-operation in any retaliatory measures which might be contemplated. As regards the Commercial Treaty, the general view expressed was that in the circumstances envisaged a denunciation might have little to commend it except from the point of view of bringing us into line with the United States. The Canadian Government for their part expressed doubts as to the wisdom of such action if taken as a reprisal and suggested that it might be preferable if notice of termination could be given in a moment of comparative calm. The Commonwealth Government felt that there was some risk of the denunciation being regarded as an irritant and suggested that counter action in an economic role could more effectively be provided by the adoption of a joint policy of import restrictions in co-operation with the United States Government. The alternative suggestion put forward in my telegram that the situation might best be met by placing Mitsui, Mitsubishi, or Okura on the Black or Statutory List was felt to [group mutilated – give?] rise to strong objections, at least as far as the two former companies are concerned, and was generally viewed with disfavour.
2. We have given most careful consideration to these views and suggestions re-examining the possible courses of action open to us. In deciding to recommend the denunciation of the Commercial Treaty, notwithstanding the doubts previously expressed, we have been influenced by the manner in which the situation has developed in recent months, and by the need for meeting any further Japanese move by a measure which could both be put into effect without delay and would at the same time afford unmistakable evidence of our reactions. We fully recognise that the practical importance of this step would be small, but do not consider that it could be regarded as provocative. On the other hand, we have reason to believe that the psychological effects in Japan would be salutary and would bring home, especially to the trading community, the perils of bad leadership. This has also been the opinion of His Majesty's Ambassador at Tokyo. We further consider it most important to bring ourselves fully into line with the United States in this matter.
3. We very much hope, therefore, that on reconsideration His Majesty's Governments in the Dominions will feel able to concur in our taking this step as soon as the moment is judged opportune. Although we should wish to proceed with the denunciation of the treaty at a very short interval after the Japanese move into Southern Indo-China, we page 38 agree with the view previously expressed by the Canadian Government that it should not be represented as a reprisal, and would propose that notice should be based on the grounds that Japanese restrictions on British trade and changing conditions have made continuation of the treaty pointless.
4. A very early reply would be appreciated since the latest indications are that a Japanese move may be imminent. As to the general United States attitude, please see my telegram M.149 today.1 In the meantime we are further exploring possibilities in the direction of import restrictions as suggested by the Commonwealth Government, but the matter is complicated by varying conditions in that there may be needs of different parts of the Empire, and it is clear that preparation of a suitable scheme would not be free from difficulty. His Majesty's Ambassador at Washington is, however, being asked to elicit the views of the United States authorities as to the prospects of their being able to co-operate in this field.