840.51 Frozen Credits/3912
The British Minister (Hall) to the Assistant Secretary of State (Acheson)
Dear Mr. Acheson: As a result of further exchanges of telegrams with London I am now able to add to the information contained in my letter of August 12th41 under the heading of “The Freezing Order and Japan”, and I am at the same time instructed to make certain concrete suggestions for parallel action with regard to a number of important commodities:
[Page 874]1. Bauxite:
The British Government is of the opinion that exports of Bauxite from Malaya to Japan should no longer be permitted and the High Commissioner is being asked to take appropriate action, unless he believes that it would cause grave economic difficulties in Malaya. We are to be informed of the eventual decision.
2. Manganese:
The British Government is also of the opinion that exports of Manganese from Malaya to Japan should cease and I understand that the Dutch take a similar view with regard to exports from N. E. I. Exports from Malaya are at present at the rate of about 10,000 tons per annum (about 50% of normal) and, as you know, Manganese ores and concentrates of less than 35% Manganese are not subject to Export License from the Philippines or the United States. I am asked to enquire whether the U. S. Government would discontinue the export of low grade Manganese from the Philippines if exports are entirely prohibited from Malaya and N. E. I.
3. Iron Ore:
It is possible that exports of iron ore from Malaya may in any case cease as a result of the shutting down of Japanese-owned mines. The British Government is, however, prepared to prohibit exports from Malaya, but it might be found difficult to do so while limited exports are still being made from the Philippines. It is understood that the U. S. Government are considering further restrictions and I am instructed to ask if they will discontinue all exports from the Philippines if exports from Malaya are prohibited.
4. Cotton:
It is our objective to restrict exports from all parts of the Empire to Japan to the minimum level necessary to meet essential requirements from Japan and subject only to this desideratum the Government of India is prepared to restrict exports of cotton to any agreed level. In view, however, of the possible political effect in India it is undesirable that the Government of India should adopt restrictions more stringent than those adopted by the U. S. Government.
In these circumstances the Government of India has followed the action taken by the U. S. Government and has taken steps to limit to the 1940 level exports of cotton to Japan, Manchuria, Korea and Kwantung. Exports to the China coast, including Shanghai, are, pending fuller information as to China’s requirements, restricted to 10,000 bales a month (approximately the 1940 level). The Government of Burma is adopting the same policy.
I am asked to emphasize, however, that as a result of increased imports of raw cotton from China, increased domestic use of artificial [Page 875] fibres, and loss of foreign markets for textiles, Japan’s requirements of India and U. S. cotton are considerably less than they were and could probably be met comfortably by imports from India and the U. S. even at the low 1940 level. The British Government is further of the opinion that failure to restrict Japan’s cotton imports from sources under control to a level calculated to cause inconvenience to the Japanese Government would have a political effect on Japan which requires consideration and I am instructed to obtain the opinion of the U. S. Government on this point.
I understand, however, that pending further examination of this question and in order to facilitate joint action, the Government of India has offered to restrict exports of cotton to Japan in any month to the rupee equivalent of the amount covered by U. S. Treasury licenses granted in the previous month, if this figure can be made available and the suggestion is otherwise practicable.
5. Essential Imports:
You will recall that in paragraph two of my letter of August 12th I indicated the general intention to be to restrict exports to Japan from all Empire sources to the minimum necessary to cover essential imports. You will further recall that in my letter of September 1st41a I was authorized to inform you that the only import from Japan into the United Kingdom of which there is essential need, is some £60,000 worth of Magnesium. I have only to add that the question is under urgent examination, but that we are still awaiting information from some parts of the Empire as to what imports from Japan they consider as essential, and that it is hoped that a common standard will be agreed upon.
6. Foodstuffs:
I am informed that it is our intention to make no exception in the case of foodstuffs to our general policy with regard to exports to Japan, but that in selecting the exports with which we propose to pay for essential imports we shall place foodstuffs (excluding oil seeds) amongst the first exports to be so allowed. This is in line with our general purpose of restricting exports to Japan to those least essential to Japan.
7. Eire:
I am informed that exports direct from Eire to Japan are most improbable because of lack of shipping and exports for trans-shipment in the United Kingdom are controlled through United Kingdom Export Licenses. As a precautionary measure, however, the Eire authorities are asking Banks to refer to them proposals for transfer from Japanese accounts.
Yours sincerely,