811.20 (D) Regulations/164
Memorandum by the Adviser on Political Relations (Hornbeck)
Reference, my memorandum of July 1817 on conversation with Messrs. George S. Walden, L. V. Collings and C. A. Thompson of Standard-Vacuum Oil Company.
I consider very significant the information given us to the effect that the Japanese are making widespread approaches for purchases of large quantities of aviation gasoline to be delivered in or before the end of August. This information should be associated with the information given by Mr. James A. Moffett, of the California Texas Oil Company, to Mr. Hamilton on July 17 (see Mr. Hamilton’s memorandum of conversation17).
I spoke to Mr. Dunn18 about this matter yesterday afternoon and he informed me of orders which are being placed for aviation gasoline by Portugal and Spain.
I spoke to Admiral Stark19 about the matter late yesterday afternoon and Admiral Stark felt that all of these developments are of importance and raise questions which should be given very serious consideration.
I feel strongly that action should be taken, and be taken promptly, toward keeping within reasonable limits or entirely cutting off exports of aviation gasoline to Japan and to other countries, especially those countries through which delivery may be made to Germany or to Italy. In the case of Japan, the extraordinary buying of which Mr. Walden and Mr. Moffett gave report suggests the existence of a plan on Japan’s part for extensive new military or naval operations in the near future. If Japan gets possession of huge new supplies of aviation gasoline and tetraethyl lead, her embarkation upon and carrying out of new acts of aggression will be greatly facilitated. If action is taken on our part which results in failure on Japan’s part to receive these new supplies, such action and the resultant failure might retard or prevent such new adventuring and would certainly make it, if embarked upon, more difficult.
There are, of course, other sources from which Japan might purchase these supplies: British companies. The British manufacture aviation gasoline themselves and they have a contract for the purchasing of the total output of a plant which belongs to the Standard-Vacuum Oil Company and which has just gone into production—30,000 barrels per month—in the Netherland East Indies. It must be [Page 587] assumed that the Japanese could, if they wished, seize this plant in the Netherland East Indies. It need not, however, be assumed that the British would sell to the Japanese if sales were prohibited by the United States. If our prohibition were made general, the British would no longer be able to depend on us for supplies of this commodity and they would have to conserve for their own use their own supplies. The output of the Standard-Vacuum Oil Company plant in the Netherland East Indies would be no substitute for the amount which the Japanese need and which they are trying to get from this country.
Mr. Dunn advanced yesterday a tentative thought as to possible procedure: that this Government might put on a general prohibition under provisions of the Defense Act,20 perhaps using a formula that we will prohibit exports temporarily for the purpose of and pending the making of a survey to determine what supplies are available in this country and what amounts are needed for our own use in connection with our own defense program.
I suggest and urge immediate consideration be given to that suggestion and to any other potentialities toward dealing appropriately with the problem presented.