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  4. Document 450

711.94/11–1741

Memorandum Prepared in the Division of Far Eastern Affairs

[Washington,] November 17, 1941.

Proposal for the Exchange of Certain Territories in the Pacific for Japanese Ships

A

Agreement might be reached between the United States and Japan (with the assent of the other countries concerned) along the following lines:

I.
Japan to have the right to purchase one or all of the following territories:
(a)
Northern Sakhalin (belonging to the U. S. S. R.)
(b)
Tonking (Northern French Indochina, belonging to the French Government)
(c)
New Guinea
1.
The western part (belonging to the Netherlands)
2.
The southeastern part (Papua) (under the Government of Australia)
3.
The northeastern part (now administered by Australia under a mandate from the League of Nations). (The mandate for this territory might be transferred to Japan, Australia being compensated for a relinquishment of its rights by Japan.)
II.
The United States to assist Japan in obtaining funds for the purchase of these territories through a loan of a stipulated part of the purchasing price, the remainder of the purchase price to be found by Japan.
III.
Japan to reimburse the United States through the transfer to this Government of merchant ships or possibly warships.

B

Agreement might be reached between the United States, China and Japan providing for the purchase of all or part of Manchuria from China, Japan to obtain the funds from the United States in return for the sale to the United States of ships.

Agreement B might form a part of Agreement A or either might be reached independently.

Either or both of these agreements would of course be reached only in conjunction with an agreement on the part of Japan to withdraw its forces from China, and follow general courses of peace.

Note in regard to Tonking: The armistice agreement of June 22, 1940 between France and Germany apparently contains no provision prohibiting the sale of any of the French colonies.

[Here follows final paragraph same as final paragraph in revised memorandum printed as enclosure to the document, infra.]