FRHM:MS (HZ) 8787/250 3.O00.COO 4/34 JC&SLtd Gp 6*4/229 (REOIMINT) MINUTE SHEET. Reference............ ¦iKi 7* Mr. Mallet. You will see from the attached telegram No.76 from the Foreign Office that the latter do not seem to share the view expressed in paragraph 6 of our despatch No.172 (which has, of course, not yet got to London), and are nervous lest the State Department's intimation that they ^cannot acquiesce in the proposed settlement *of islands which are claimed by the United States" foreshadows some attempt by the Americans to force the issue in regard to Gardner Hull and Sydney Islands in the same way as they did over Canton. In the hopes of forestalling any such action we are to tell the State Department that the various interested British authorities are actively considering the United States Government's suggestion that the whole question of the status and use of^thes* islands should be discussed. This, I think, marks rather a change of attitude on the part of London who have recently been aiming at having a discussion with the Americans about mutual flying facilities on the islands only and not about questions of sovereignty. The State^Department will no doubt be gratified to receive this information. They are hardly likely, however, to react favourably to the announcement that we .have actually gone the length of sending a colonisation party to Gardner, Hull and Sydney, and I should be inclined to doubt the wisdom of giving them the warning about "precipitate action" suggested by the Foreign Office. I understand that the passage referred to in our note of May 23rd 1938 rather upset the State Department, and if we were now to repeat such a warning they might, I think, well reply that we had been rather precipitate ourselves in our action in respect to GardneJ^Hull and Sydney Islands in/ [OVER. £22 In this connexion please see the minute written by the Air Attache on February 11th on the recent papers received from the Foreign Office about the question of all these, islands* It has always seemed to me, knowing very SHIP would little about, the problem, that it /be most unfortunate to have a row with the United States, especially at the present Juncture, over this question when our interests were not really conflicting. Both we and the United States want to obtain air facilities in the islands for our respective Pacific air services. The United States afce also interested in establishing naval bases in some of the islands to protect themselves against the Japanese, and New Zealand,and to a lesser extent Australia, are also interested in the islands from a defence point of view - here again against the Japanese. It .'-surely should not be impossible to reconcile these different objectives and come to some amicable agreement instead of carrying oh as we are at present with each side trying to steal a march upon the other or being afraid that the other side is trying to d< this. I should have thought, however, that it would be a great mistake for us to precipitate matters by terminating Pan American Airways1 landing rights in New Zealand even though we might have some legal justification for doing so. To do this would obviously be interpreted by the Americans as ian attempt on our part to force them to give us landing facilities at Hawaii. No doubt our action would bring the Americans out into the open and compel them to say definitely what they did intend to do about letting us land in Hawaii but we should undoubtedly cause a lot of bad blood by acting in this way. It would, I should have thought, be much better to proceed the other way ground and begin by making a formal application on behalf of the British |Q| company/ MINUTE SHEET. Reference______ 73 -3- company for permission to land in Hawaii. If such a request were turned down^then we should have much better grounds for cancelling the American landing rights in New Zealand. The difficult^ is, however, as I understand it, that we are not yet in a position to ask for these landing rights in Hawaii; in fact, the British company which it is contemplated should eventually operate the British-Trans-Pacific Air Service has not yet been even formed and it may be months before they are in a position to make any application in respect of Hawaii. All this is very unfortunate as in the meantime it makes us look as if we were trying to put obstacles in the way of the in-tea*@s1reQ American air servfeejS in order to make things easier for the as yet more or less hypothetical British service. The Ambassador may perhaps return with some later information about the present intentions of the authorities in London and I understand that in any case you are proposing that . action on Foreign Office telegram No.76 should be postponed until you can discuss the whole question with His Excellency. Perhaps as a result of this discussion some way out of the present vicious circle can be discovered. (IIS 8787/2)0 £000X00 404 JC&SLtd Gp 644/229 (REQIMINT) (6.% [OVER. i /zzr-Zs^. ^ />t minute shf.f.t Reference.____