711.94/1963
Memorandum by the Adviser on Political Relations (Hornbeck) to the Under Secretary of State (Welles)
Mr. Welles: Reference, the project sponsored by the Council on Foreign Relations known as “Studies of American Interests in the War and the Peace.”
One of the groups into which the “Studies” project has been divided is the Group on Economic and Financial Questions, of which Messrs. Alvin H. Hansen and Jacob Viner are Joint Rapporteurs. Under date November 23, 1940, there was prepared for this group by William Diebold, Jr., a memorandum entitled “Japan’s Vulnerability to American Sanctions” which contains, at pages 23–24, the following observations:
“Certain additional steps might be taken to make a joint embargo watertight by keeping Latin American supplies from Japan:
- “1. The United States and Great Britain might buy up strategic products for their own defense and war efforts, leaving nothing for Japan; this would hardly be feasible for oil however, which is available in such great quantities.
- “2. Withholding shipping from Japan, especially the Scandinavian tankers, would make it much more difficult for that country to buy from Latin America.
- “3. Japan could not be permitted to procure free foreign exchange to finance purchases in Latin America; Japan could not be allowed to sell to the United States if she were not allowed to buy here; nor could we buy Japanese gold.
- “4. Pressure on American, British and Dutch companies owning oil and copper in Latin America not to sell to Japan would greatly extend the embargo; however there would be the danger of arousing the hostilities of local governments interested in selling as much abroad as possible.
- “5. Some form of commodity cartel or joint marketing agreement such as was adumbrated at the Havana Conference13 might be operated to keep products from Japan.
- “6. Refusal to sell to Japan might be made a part of Pan-American cooperation, and a condition favorable for securing United States loans.
“Short of a joint embargo by the United States, British Empire countries, and the Dutch East Indies, on all trade with Japan, or all trade in war materials, there are measures which would be effective in varying degrees in checking Japan’s war effort. For instance, an embargo by the United States alone, which might be accompanied by an agreement that British and Dutch countries would hold sales to Japan to a pre-embargo level; a boycott of Japanese goods, making it difficult for her to buy war materials; use of defense measures to keep war materials from Japan; a step by step embargo of the sort already embarked on; strategic purchases interfering with Japan’s sources of supply, for example, Philippine Islands iron ore; shipping restrictions. Each of these measures would hamper Japan’s war effort; their total effect would depend on the pace at which they were applied and the care with which they were directed at vulnerable points in Japan’s economy.
“An embargo by the United States alone, while injurious to Japan’s economy, would not stop her war effort. However, if British and Dutch countries agreed not to sell Japan more oil, iron ore, aluminum, and other products than before the embargo was imposed, it might well be effective. Certainly a joint embargo by the United States, British Empire countries, and the Dutch East Indies would limit the life of Japan’s war effort to the size of her stock piles.”
- Second Meeting of the Ministers of Foreign Affairs of the American Republics, held at Habana, July 21–30, 1940. See Foreign Relations, 1940, vol. v, pp. 1 ff.↩