Memorandum by Mr. Joseph W. Ballantine to the Secretary of State

Mr. Secretary: With reference to the Japanese proposal of November 20 for a modus vivendi59 and our memorandum containing suggestions for possible comment that might be made orally to the Japanese in regard to their proposal (copy of which is attached),60 there are given below additional suggestions for possible comment:

With reference to item three in regard to cooperation in obtaining from the Netherlands East Indies materials which our two countries need, it is not clear why the Japanese Government desires to limit this proposal to the Netherlands East Indies. It would appear to us that, if the Japanese Government could see its way clear to adopting our proposal in regard to commercial policy, the field for cooperation by the two countries would not be limited to any one area but would extend to the entire world. It would seem to us that the Japanese proposal takes no account of our broad offer which was renewed in very specific terms in the paper which was given to the Japanese Ambassador on November 15.61 It would seem to us that such a proposal would be open to possible criticism. That is to say that, whereas Japan was insisting on preferential treatment for itself in certain areas, in other areas it was asking for cooperation of the United States in obtaining for Japan the very kind of economic opportunities which Japan was [Page 634] trying to deny to third countries elsewhere. This Government has consistently advocated broadening the basis of world trade not from any selfish point of view but from the point of view of providing stable peace and elimination of chronic political instability and recurrent economic collapse. Such a program would provide means of raising living standards all over the world, thus promoting the well-being of all peoples.

With reference to the provision that the Government of the United States should supply Japan a required quantity of oil, it may be observed that until very recently the United States was supplying Japan with an ever-increasing amount of petroleum products, even to the extent where there was widespread public criticism in the United States of permitting this to continue. The period since 1937 was marked, on the one hand, by a tremendous increase in imports into Japan from the United States of petroleum products and, on the other hand, according to reports reaching us, by a progressive curtailment in the amounts of oil released in that country for normal peacetime consumption. There is no desire in this country to deny to Japan petroleum products needed for its normal economy, but the increased consumption of American petroleum products in Japan for a military purpose brings to the fore a question which we have called to the attention of the Japanese Ambassador, namely, that the Japanese association with the Axis powers is doing the United States tremendous injury.

With regard to the fifth point in the Japanese proposal, you might wish to emphasize again what you said to the Japanese Ambassador on November 20,62 namely, that, when the Japanese complain about our helping China, the public in this country wonders what is underneath the Anti-Comintern Pact; that Japanese statesmen ought to understand that we are helping China for the same reason that we are helping Britain; that we are afraid of the military elements throughout the world led by Hitler; and that the methods adopted by the Japanese military leaders in China are not unlike Hitler’s methods. You might then ask what the Ambassador thinks would be the public reaction in this country if we were to announce that we had decided to discontinue aid to Great Britain. You might say that in the minds of American people the purposes underlying our aid to China are the same as the purposes underlying our aid to Great Britain and that the American people believe that there is a partnership between Hitler and Japan aimed at dividing the world between them.

J[oseph] W. B[allantine]