MEMORANDUM
 
      The question posed is what would be the effect on the United 
      States of the decline or collapse of the British Empire. This 
      question may be considered from three points of view.
 
      
 
 
l.
 
      The first is that in a general war in which Great Britain and 
      France fight Germany, Italy and Japan simultaneously, with or 
      without assistance from Russia, and with the United States neutral, 
      Great Britain is defeated and has to make peace, as Germany had 
      in 1918, on the best terms she can obtain. In that event the 
      victorious totalitarian powers would certainly demand the transfer 
      to themselves of the British navy, or of such parts of it as 
      could not be sunk in time. This is what the Allies did to Germany 
      in 1918. The totalitarian powers would also certainly demand 
      the transfer:
 
      
 
 
(a) of all overseas strategic naval and air bases such as 
      Gibraltar, the Falkland Isles, Egypt and the Canal, Aden, Ceylon, 
      Singapore, and some at least of the South Pacific islands. They 
      would do this because it is the occupation of these places which 
      has given the British navy control of the seas in the past, and 
      because the ultimate objective of a totalitarian victory would 
      be to take over from Great Britain the control of the oceans 
      and sea highways so that they could dominate the world.
 
      
 
 
(b) of large colonial territories in Africa and else where. 
      These territories would be valuable to them partly for economic 
      and settlement reasons and partly for strategic reasons. If they 
      continued their present totalitarian economy, they would almost 
      certainly include all these territories within their own Oollverein, 
      so that they used their own currency and the territories became 
      economically part of their own home lands, doing only such trade 
      with the rest of the world as they decided to allow on the principle 
      of barter. Strategically the occupation of French and British 
      colonies in West Africa would give Germany