Foreign Relations of the United States Diplomatic Papers, 1941, The Far East, Volume V

894.24/1750

Memorandum by Mr. Alger Hiss, Assistant to the Adviser on Political Relations (Hornbeck)

[Extracts]

[Washington,] September 20, 1941.

Restrictions on Japanese Trade and Payments in the Netherlands East Indies

1. Present factual situation. In fact trade is at a standstill and all Japanese funds have been frozen. Apparently permission is granted for withdrawals for local transactions by Japanese resident in the Indies.

2. Policy decisions thus far made by the Indies Government. The Government of the Netherlands Indies has not definitively adopted a detailed policy because we have as yet been unable to inform it that we have adopted a definitive policy.^* It has assured us that it desires to adopt a policy no less restrictive than whatever policy we adopt. Like the British Government it has stated its need for assuring itself of certain types of imports—especially of cotton textiles which, incidentally, may be obtainable from the United States. The Indies Government is also desirous of obtaining certain specific lots of goods purchased and already paid for which the Japanese Government is holding in Japan. It has, in addition, made specific proposals to us as to what restrictions should in its opinion be adopted.⁸³

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6. Desire of Indies Government for political assurances. Estimate of policy Indies Government is prepared to adopt. Unlike the British Government, the Government of the Netherlands East Indies has indicated that it believes that discussion of and agreement upon related political issues should accompany any final decision to adopt a definitive policy of restriction toward Japan. The Legation has, however, in recent weeks limited itself primarily to attempting to ascertain the details of our definitive policy while assuring us of the desire and intention of the Indies Government to adopt a closely similar policy. It would appear that, regardless of the absence of political commitments, the Indies are in fact prepared to pattern their policy closely after whatever policy we adopt and that they believe it wise to adopt a policy designed severely to restrict all supplies having military or general industrial value. It is not believed feasible to obtain more definite indications of Indies policy until we are in a position to propose a detailed policy for adoption by us and by them.

1. The Dutch have of course been told what our policy is to date in theory and in actual practice. As they have, however, had no reason to interpose any special conditions as to manner of payment, they have been faced for some weeks past with the issue (which we have not yet had to consider) of whether exports to Japan of important products shall in fact be permitted. Not wishing to permit such exports while we are not in fact exporting to Japan they have so far refused to grant export licenses for products of importance. [Footnote in the original.]
83. Restrictions on a number of exports were suggested based on the principle that “all supplies enlarging or maintaining Japan’s military machine” should be reduced as far as possible.