I think that the proposal is the most constructive one which I have yet
seen. I have shown the proposal to all of the senior officers of FE, and
all of them concur in that view.
I urge that most careful consideration be given promptly to the proposal.
To that end I suggest that copies of the proposal be made available to
Admiral Stark and to General Marshall and that you arrange to confer
with them in regard to the matter as soon as they have had an
opportunity to examine the proposal.
[Annex]
Draft Document Prepared in the Division of Far
Eastern Affairs
Outline of Proposed Basis for Agreement Between
the United States and Japan
A
On its part the Government of the United States proposes to take the
following steps:
1. To reduce to a normal footing American naval forces now in Pacific
waters, without of course limiting in any way the freedom of action
and of decision of the Government of the United States with regard
to the disposition of naval forces of the United States.
2. To negotiate a multilateral non-aggression pact with Japan, China,
the British Empire, the Netherlands, Thailand and Soviet Russia.
3. To suggest to the Chinese Government and to the Japanese
Government that those Governments enter into peaceful negotiations
with regard to the future status of Manchuria.
4. To enter into negotiations with the British, Chinese, Dutch, Thai
and Japanese Governments for the conclusion of an agreement
whereunder each of the Governments would pledge itself to respect
the territorial integrity of French Indochina and, in the event that
there should develop a threat to the territorial integrity of
Indochina, to enter into immediate consultation with a view to
taking such measures as may be deemed necessary and advisable to
meet the threat in question. Such agreement would provide also that
each of the Governments party to the agreement would not seek or
accept preferential treatment in its trade relations with Indochina
and would use its influence to obtain for each of the signatories
most-favored-nation treatment in trade and commerce with French
Indochina.
5. To give up all extraterritorial rights in China, including rights
and interests in and with regard to the International Settlements at
Shanghai and Amoy, and rights under the Boxer Protocol of 1901.
To endeavor to obtain the agreement of the British Government to give
up British extraterritorial rights in China, including rights in
[Page 624]
international settlements
and in concessions and under the Boxer Protocol of 1901.
To use its influence toward causing the British Government to cede
Hong Kong to China. (This provision might take the form of an
undertaking to use our influence with the British Government to
cause the British Government to sell Hong Kong to China, the
purchase price to be loaned China by the United States.)
6. To recommend to Congress enactment of legislation to amend the
Immigration Act of 1924 so as to place all peoples of all races on a
quota basis.
7. To negotiate a trade agreement with Japan, giving Japan (a) most-favored-nation treatment and (b) such concessions on Japanese imports into
the United States as can be mutually satifactorily arranged,
including an agreement to bind raw silk on the free list.
To enter into a joint declaration between the United States and Japan
with regard to commercial policy along the lines of the draft handed
the Japanese Ambassador on November 15.
8. To extend to Japan a $2,000,000,000 20-year credit at 2 percent
interest, to be drawn upon at the rate not to exceed $200,000,000 a
year except with approval of the President of the United States.
(Note: The United States should be prepared to extend a similar
credit to China.)
(Note: This provision presumably would require Congressional
approval.)
9. To set up a $500,000,000 stabilization fund half supplied by Japan
and half by the United States, to be used for the stabilization of
the dollar-yen rate.
(Note: The United States should be prepared to act similarly in
regard to China.)
(Note: This provision may require Congressional approval.)
10. To remove the freezing restrictions on Japanese funds in the
United States.
B
On its part the Government of Japan proposes to take the following
steps:
- 1.
- To withdraw all military, naval, air and police forces
from China (excluding Manchuria—see separate provisions) and
from Indochina.
- 2.
- To withdraw all support—military, political, economic—from
any government or regime in China other than the Government
of the National Republic of China with capital temporarily
at Chungking.
- 3.
- To replace with yen currency at a rate to be agreed upon
among the Treasuries of China, Japan, Great Britain and the
United States all Japanese military scrip, yen and local
regime notes circulating in China.
- 4.
- To give up all extraterritorial rights in China, including
rights in international settlements and concessions and
rights under the Boxer Protocol.
- 5.
- To withdraw all Japanese troops from Manchuria except for
a few divisions necessary as a police force, provided U. S.
S. R. withdraws all her troops from the Far Eastern front
except for an equivalent remainder.
- 6.
- To sell to the United States . . . . . tons of Japanese
merchant shipping, to be delivered to the United States
within three months of the signing of the present agreement;
also, to sell to the United States up to 50 percent of
Japan’s current output of shipping, including naval and
commercial ships, on a cost-plus-20-percent basis as the
United States may select, it being understood that the
United States will sell Japan such raw materials as it may
be necessary for Japan to import for these purposes.
- 7.
- To negotiate a multilateral non-aggression pact with the
United States, China, the British Empire, the Netherlands,
Thailand and Soviet Russia.
- 8.
- To remove the freezing restrictions on American funds in
Japan.
