Foreign Relations of the United States Diplomatic Papers, 1940, The Far East, Volume IV

740.00112 European War 1939/1509

The Department of State to the British Embassy

Reference is made to the British Embassy’s memorandum of May 1, 1940, which was handed to Mr. Welles⁸⁰ by the British Ambassador⁸¹ on that date, in which it is stated that the British Government “has reached the conclusion that the only method whereby it can prevent vital materials reaching Germany is to prepare to ration Japan in those commodities which are in Allied control and thereafter make an arrangement with the Japanese Government whereby it will undertake to prevent goods destined for Germany from being carried on Japanese ships or on Japanese controlled railways or, if carried on other neutral ships, being trans-shipped at ports controlled by the Japanese, in return for the release to Japan of certain products of the British Commonwealth.” Reference is made also to the conversation on this subject which was held on May 4⁸² between officers of the British Government (Mr. Ashton-Gwatkin,⁸³ Mr. Neville Butler⁸⁴ and Mr. R. Reid-Adam⁸⁵) and officers of the Department of State (Mr. Grady,⁸⁶ Mr. Hornbeck,⁸⁷ Mr. Feis⁸⁸ and Mr. Hamilton).

On the basis of the statements made in the British Embassy’s memorandum of May 1 and by the British Government’s representatives who attended the meeting on May 4, it is the understanding of the Department of State that the British Government contemplates entering into an arrangement with the Japanese Government designed to prevent goods destined for Germany from being carried on Japanese ships or Japanese-controlled railways or from being transshipped at ports controlled by the Japanese; that the proposed arrangement would be along the lines of arrangements which the British Government has made previously with certain of the Scandinavian countries; that the British Government does not intend to offer Japan any special inducement other than agreeing that Japan might continue to buy from the British Commonwealth certain supplies for its own use; that extension of credit to Japan would not be involved; and that the British Government is not asking the Government of the United States to exercise any control over its trade with Japan other than such control as this Government may be exercising as a result of its own independent desire and as it might similarly exercise in the future.

During the conversation on May 4, officers of the Department referred to the fact that in relations between the United States and Japan the Government of the United States has proceeded with a process of untying its hands and thus freeing itself, should circumstances so require, to place restrictions on trade with Japan; that this Government would therefore naturally view with concern action by any other Government which would serve to tie the hands of that Government vis-à-vis Japan, or to assure the Japanese Government alternative supplies should supplies be cut off from the United States. It was pointed out also that the Government of the United States could not look with equanimity upon the conclusion of any arrangement between Great Britain and Japan which would operate arbitrarily to divert Japan’s purchases from the markets of the United States to the markets of the British Commonwealth. In response to these comments Mr. Ashton-Gwatkin indicated realization that these were matters requiring careful consideration. He indicated also that it was his understanding that the proposed arrangement between Great Britain and Japan would provide an assurance of an availability to Japan of the commodities involved in normal amounts only rather than in amounts in excess of normal, and that arrangements of the character under discussion were usually concluded for a short term. Representatives of the Department expressed the view that the shorter the term of any such arrangement between Great Britain and Japan the less likely would it be that it develop that such an arrangement operate in a manner contrary to some possible American line of action.

The Government of the United States would of course not be in position to express its assent to and would be seriously concerned over any development in relations between Great Britain and Japan which would operate at serious cross-purposes with the policies of this Government in and with regard to the Far East and with possible measures which this Government might subsequently find it advisable to take in the way of increasing restrictions on trade with Japan.

The Government of the United States understands that the contents of the British Embassy’s memorandum of May 1 were brought to the attention of this Government as a matter of information. Appreciating the thoughtful spirit which has moved the British Government, the Government of the United States in the same spirit has made record hereinabove of its reactions to the information which the British Government has been so good as to furnish.

Washington , May 21, 1940.

80. Sumner Welles, Under Secretary of State.
81. The Marquess of Lothian.
82. Memorandum of conversation not printed.
83. Frank Ashton-Gwatkin, Acting Principal Assistant Secretary, British Foreign Office.
84. Nevile Montagu Butler, Counselor of the British Embassy.
85. Commercial Secretary of the British Embassy.
86. Henry F. Grady, Assistant Secretary of State.
87. Stanley K. Hornbeck, Adviser on Political Relations.
88. Herbert Feis, Adviser on International Economic Affairs.