811.20 (D) Regulations/4148⅓
Memorandum by the Assistant Secretary of State (Acheson) to the Under Secretary of State (Welles)
Status of Trade With Japan and Japanese Controlled Territory Since the Freezing Order
Imports.
The only substantial imports which have arrived were those on the Tatuta Maru which were discharged as a result of the libel suits. Similar action occurred on a smaller vessel at Seattle. So far as I [Page 859] know the goods are still in Customs custody. No applications for payment have been made.
Although imports are permissible from occupied China, other than Manchuria, few, if any, have arrived due to the action of the Japanese authorities in holding up their ships.
A problem exists regarding goods consigned to the United States and paid for by American purchasers which were unloaded from Japanese ships in Japan. Considerable pressure is being exerted by the purchasers to have these goods sent. Minor problems exist about complete payments which have been made by the purchasers but have not been released to the seller. In the absence of further deterioration of relations with Japan, it may be that some action will have to be taken regarding these goods.
Exports.
Exports from the Philippines are continuing, subject to existing export controls. The principal item here is iron ore. Freezing controls have not been used to further restrict trade from the Philippines.
Exports to occupied China, other than Manchuria, continue under a general license. Some goods have gone forward but the volume is small due to the absence of Japanese ships.
Exports to Japan proper.
Small cargoes were authorized for the Tatuta Maru and a ship in Seattle. The cargo consists of low-grade lubricating oil, cocoa beans, cotton and asphalt.
The Treasury continues to license freely bunkers and supplies for Japanese ships.
So far as cargoes other than the two mentioned are concerned, the situation is as follows:
Petroleum products. Export applications have been filed for a total amount of $2,111,412, consisting principally of crude oil and Diesel oil with some lubricating oil. On these, licenses have been granted in the amount of $178,650. Licenses have been rejected, because the material was above the permitted specifications, in the amount of $729,910. The remainder are pending.
To pay for the amounts of the granted licenses the Japanese have filed applications under the freezing order. The Treasury has stated to them that in view of the fact that the Japanese Government and Japanese banks are known to have in this country between $1,000,000 and $3,000,000 and have in South America dollar balances upward of $6,000,000, it does not seem necessary to release frozen funds to pay for these shipments. The Japanese reply that the funds have been turned over to the Japanese Navy which refuses to release them. As the matter stands they are taking it up again with the Japanese Naval [Page 860] authorities and are considering using their South American dollar balances. A further memorandum on petroleum is attached27 which recommends a reduction in the permissible exports of crude and Diesel oil to bring those items into line with the permissible exports of gasoline and lubricating oil. The British have pressed us to control strictly the export of Diesel. The memorandum also advocates our insistence that the Japanese use American currency which they have and their dollar balances in South America before any frozen dollars are released.
In Mr. Welles’s letter to the President,28 which the President approved, is reported that average monthly shipments in 1941 has been $600,000. Applications have been filed for over $2,000,000 since the freezing order. It is recommended that a monthly quota of $600,000 be permitted and that this should be paid for by currency or South American balances.
Applications for general merchandise (not now subject to export control) have been filed under the freezing order in the amount of $150,000. These consist principally of fur scrap for Manchuria and spruce, probably for airplane construction. General Maxwell is considering adding fur scrap to the export control list. No action has been taken upon these applications pending a decision as to (a) whether the materials have any strategic value to Japan, and (b) whether payment shall be permitted by release of frozen funds or whether it shall be in currency or South American balances.
In addition to the above applications have been filed to release frozen dollars to pay for exports from South America. The applications cover either cotton from countries in which Japanese already have dollar balances or are strategic materials which we are attempting to purchase. These applications have been denied.