From: Washington.
To: Tokyo. 
7 August 1941
#663 (In 2 parts, complete).

U. S.-Japanese relations have now reached an extremely critical stage. However, this does not come unexpectedly; undoubtedly it as unavoidable and is the by-product of our government's pursuing their essential policies.

I now wish to describe the recent general outlook in the United States. I realize, of course, that I may be too presumptuous, but do so only because I believe it might be of some interest to one whose time in office has been as short as yours.

1. Fundamentally speaking, the United States is under the impression that the ties between the Axis partners are closer than appear on paper. It is convinced that the East is working in close cooperation with the West, and vice versa. It assumes that the aims of Germany and Italy in the West and Japan in the East are to conquer the world. Talking with ones who harbor such policies, the United States says, is out of the question.

We, therefore, carefully explained that Japan is guided solely by the principles of HAKKO ITIU (brotherhood of mankind) and that the Axis Pact, like the earlier Anglo-Japanese Pact, is merely an agreement within limitations. This explanation lead eventually to beginning the unofficial discussions.

Then, while the Secretary of State was on leave due to illness, the occupation of French Indo-China took place. The United States, refusing to accept our explanation that that was a peaceful occupation, discontinued the unofficial discussions then and there. Moreover, the United States returned to its original opinion with regard to Japan. Acting Secretary of State Welles made this clear in his statement and it was later confirmed by Secretary Hull himself. Last night, the Secretary expressed his deep disappointment to me. According to the Postmaster General, this disappointment on the part of the Secretary was all the deeper because he had been so very interested in bettering the relations between Japan and the United States I have already reported that Secretary Hull and his very good friend Walker were put in an exceedingly embarrassing spot in their relations with their Cabinet colleagues.

2. The United States policy toward Japan cannot be termed as one of definite unfriendliness to Japan herself, they explain. The United States has to take some measures, they say, to counteract certain steps taken by Japan. The United States is only taking measures which will counter Japanese southward or northward expansion attempts.

When Japan occupied French Indo-China, the United States retaliated with the "freezing" order and the export embargo, a joint warning by Hull and Eden was issued with regard to any ambitions in the direction of Thailand. There is no doubt whatsoever that the United States is prepared to take drastic action depending on the way Japan moves, and thus closing the door on any possibility of settling the situation.

With regard to a northward move by us, it must be remembered that the United States has suddenly established very close relations with the Soviet Union. In view of this fact, it is highly doubtful that the United States would merely watch from the sidelines if we should make any moves to the north.

It is reported that the President accompanied by high army and nay, officials is meeting with Churchill. This indicates that careful preparations are being made to counter our every move without falling back a single time.

3. It must be noted that the government of Germany is exercising the utmost precaution and perseverance in dealing with the United States. It has even gone so far as to issue peace terms in an attempt to ease U. S. public opinion. Therefore, the Pacific, of late, has become the center of public attention and there is a good possibility that, depending on developments in Europe, this trend will be considerably invigorated in the near future.

I have submitted my humble opinions before and they are unchanged today. Our country is at present standing at a most critical crossroads. My only desire is that we choose the right road, for the sake of the future of our country.

JD-1:                                        (D) Navy Trans. 8-15-41 (X)