Memorandum by the Adviser on Political Relations (Hornbeck)15

Reference FE’s memorandum of April 14 entitled Appraisal of the Situation in China.

The memorandum under reference gives a very interesting résumé of United States policy and specific acts in the field of relations with Japan and China during the period of the current Japanese-Chinese hostilities.

It is the belief of the undersigned that, taken by itself and as it stands, the content of this memorandum puts the course followed by the American Government in altogether too favorable a light. It is indicative of an impression on the part of its authors that American assistance to China has been large in amount and has had a very substantial effect, favorable to China, upon the course of developments in the Japanese-Chinese hostilities; also, that the course followed by the United States in regard to Japan has had substantially restraining influence upon Japan and the course followed by Japanese leaders.

Unquestionably, the policy and acts of the United States have contributed to the continuance of China’s resistance to Japan and have been a factor among the handicaps which have affected Japan’s operations. But to say that “the policy of this Government so far would appear to have been substantially effective in sustaining China and in impeding Japan’s course of action” is to give far too much credit—for something that isn’t.

This Government has in fact extended to China in a period of almost four years credits and loans to the amount of $175,000,000 and it has expended approximately $220,000,000 for purchase of Chinese silver. Most of the credits have been connected with transactions commercial in character, involving purchase and sale (exchange) of commodities. Of the total amount, $50,000,000 has to do with the problem of support of Chinese currency and related matters, and has not yet been effectively applied. In the field of purchasing of Chinese silver, the first effects of this Government’s silver purchase program were disadvantageous to China (that program had not been evolved and adopted with any view to helping China) and the fact that the program ultimately operated to China’s advantage was essentially accidental to the turn of world events.

In comparison with the amount and the type of aid which the United States has given to Great Britain during recent months and [Page 165] to the vast program upon which this country is now embarked for the giving of aid to Great Britain, the amount and the types of aid which we have given to China over a period of four years appear insignificant in proportions. Looking at the amount and the character of the aid which we have given to China and at the situation which prevails in China today, one may well propound this speculative query: Suppose the United States had in 1937 or 1938 embarked upon a wholehearted program of “all-out” aid to China, how different might be the situation with regard to China (and Japan and our problems in the Pacific and in the world) now.

Comment will be made: “The Government of the United States was not at that time in position to embark upon such a program”. True. But, the memorandum now under reference is devoted to an appraisal of what the Government of the United States has done, not to an analysis of the reasons why in regard to what it has and what it has not done; and an objective appraisal of any phenomenon stands separate from and independent of an analysis and appraisal, if offered, of the forces and circumstances which have made the said phenomenon what it is.

The affirmation that the policy of this Government has been substantially effective in impeding Japan’s course of action is especially open to doubt in its relation to Japanese action vis-à-vis China. The statement is perhaps less questionable in its relation to Japan’s southward movement, although even there it seems likely that such caution as Japan has shown because of the United States has been due much more to a fear of possible forceful action that the United States might in fact take in response to a major Japanese threat to British communications and to American sources of supply than to any positive action taken by the United States over the past few years. However, the immediate context and preceding statements in the memorandum* make the assertion under reference seem to apply particularly to the effect of the policy of this Government upon Japan’s course of action in China; and in that respect the assertion, it is believed, is unwarranted.

Protests by the Government of the United States against Japan’s aggression in China and wide-spread disapprobation by the American [Page 166] public of that aggression, have had little discernible effect upon Japan’s course of action vis-à-vis China. We have, it is true, also informally discouraged private financial assistance to Japan, but actions of the Ford Company and more recently our experience with the Paramount Company indicate that our advice may have been less a controlling factor than has been the economic unattractiveness of Japanese securities. Our economic measures (imposed, beginning with July, 1940, partly to restrain Japan’s inclination to move southward and in greater part for urgent reasons of domestic rearmament rather than to “impede” Japan in China) have been much too recently put in force to have had any substantial effect as yet. Indeed, on net balance there can be no question but that since the outbreak of the Sino-Japanese conflict the increases which we have permitted to develop in our exports to Japan of petroleum products, iron and steel products, other metals, machine tools and a long list of miscellaneous materials essential for war have far outweighed the advice which we have given against loans or credits being made available to Japan and the belated and incomplete restrictions which we have imposed against Japan. We have taken against imports from Japan, the major source of Japan’s foreign exchange, no action whatsoever.

Without laboring these points by a more detailed reviewing of the history of our recent economic relations with Japan and China, it is believed warrantable to call attention to the fact that a considerable and readily available literature has been produced on this subject and that in the said literature there appears a good deal more as data material on which to base an evaluation of our Far Eastern policy than a listing of our credits and loans to China, of our Red Cross and unofficial relief contributions to China, of our exports of arms and ammunition to China, and of the figures which show the decline in our general exports to Japan in (very) recent months.

The United States Commercial Attaché at Tokyo has estimated that in January 1940 we were supplying about 40 percent of Japan’s imports of metals, of raw cotton and of wood pulp, about 50 percent of the imports of petroleum products, 70 percent of imports of scrap iron and 95 percent of imports of automobile parts. There is attached hereto a table of our exports to Japan16 that throws a somewhat different light upon the question of our having hindered or aided Japan’s program in regard to China than does the table marked Annex IV16 which is appended to the memorandum now under reference.

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It seems to me that a thoroughly objective appraisal of the effects of American policy (in terms of action and non-action) toward the Sino-Japanese conflict would arrive at and set forth a conclusion that we have helped China somewhat and that we have hindered Japan somewhat; that the difficulties that Japan has encountered in her attempt to subjugate China and China’s successes in resisting that attempt have, in both cases, been due only in small part to the action taken, positive and negative, by the American Government; and that Japan’s present ability to continue her efforts in China and to give thought now to possible “bigger and better” aggressions and even to “war with the United States” is a consequence in no small part of the practically unrestricted access which Japan enjoyed for more than three long years to the rich and most helpful markets of the United States.

Were I writing at this moment an appraisal of the situation in the Far East, and especially of the policy and operations of the United States during the last several years as a factor therein, I would be inclined to say regarding our policy and operations that, as between good or bad, the principle of “praise the day when it is done” applies. And, I would be inclined to raise this question: In a situation wherein two nations are engaged in armed conflict over a fundamental issue, is a procedure on the part of a third nation which expresses itself in giving of a little help to one and in the giving of a little hindrance to another a sound procedure? Is such a procedure likely to win and hold the good will of the nation helped and to avoid the enmity of the nation hindered; is it not likely to gain for the country which engages in it the substantial ill will of both; does it produce for the country which follows it a net gain; what problems does it solve; and to what does it lead?

[Here follows an annexed section giving comparable figures for 1936–40 on “certain specific exports from the United States to Japan”.]

S[tanley] K. H[ornbeck]
  1. On May 9 Dr. Hornbeck transmitted this memorandum together with the one dated April 14 prepared in the Division of Far Eastern Affairs, to the Under Secretary of State and the Secretary of State who noted them on May 10 and 13, respectively.
  2. On page 2 the statement is made that this Government has “considerably hindered the development of Japan’s military program in China” by a policy of holding Japan responsible for personal and property damage to American nationals. We have not “held Japan responsible”; we have merely declared that we will hold her responsible.

    On page 3 the statement is made that “American opposition and disapprobation” and the necessity (sic) that Japan take care lest Japanese activities in China involve Japan with the United States have “been steadily restraining influences upon the progress and development of Japan’s program.” Query: How far is this true as regards “progress and development of Japan’s program” in China? [Footnote in the original.]

  3. United States imports of raw silks from Japan
    1936 1937 1938 1939 1940
    $94,967,422 $99,572,976 $83,644,281 $106,951,000 $105,311,000

    [Footnote in the original.]

  4. Not printed.
  5. Not printed.