792.94/156: Telegram

The Minister in Thailand (Peck) to the Secretary of State


465. 1. Since arrival on September 12, I have held numerous conversations with Thai [officials?], foreign diplomats, American and other foreign residents, and my staff, and mainly on the basis thereof I respectfully submit the following [as?] pertinent to a consideration of policy toward Thailand, followed in paragraphs 7 and 8 by certain recommendations.

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…The Thai believe themselves threatened with armed invasion from Indochina if Japan decides to undertake further southward expansion. Should Thailand be cowed or cajoled into a military alliance with Japan, the effect on the joint interests of the United States and [Page 307] Great Britain would be permanently harmed from the standpoint alike of military position, politics, trade and prestige. Western including American commercial and cultural activities in Thailand would dwindle if not disappear and Japan’s “new order in greater East Asia” would be greatly strengthened by the adherence thereto of a nation which though small is politically independent and is respected throughout the East as a center of Buddhism and Asiatic culture. It is demonstrably worth while from the American standpoint to preserve Thailand as an obstacle to Japanese imperialism if this can be accomplished without too great sacrifice elsewhere. Excluding the contingency of an armed invasion, the indications here are that the United States unaided could by a very moderate use of credit and manufactured goods urgently needed here deter Thailand from voluntary association with Japan. The effort would involve no risk of political entanglement and could be terminated at will. It would constitute a measure of economic defense against aggression. I therefore suggest that such a program be initiated.

6. The object of the proposed economic assistance to Thailand would be only to encourage Thailand to resist Japanese aggression passively and by no means to provoke forcible action. Therefore it would be advisable not to ask Thailand for political assurances or contractual monopoly rights to rubber and tin. It would be preferable to support the Government’s official policy of international impartiality and make this policy continuously advantageous to Thailand. The result would be tantamount to “naturalizing” [“neutralizing”] the country without the necessity of obtaining Japan’s assent.

7. Let us now consider the nature of the assistance that might appropriately be extended to Thailand. Eliminating petroleum products from the list of imports, in view of the fact that American and British firms are now supplying such needs, statistics show that remaining total imports from April to December, 1940, totaled roughly 36 million United States dollars in value, of which it may be computed the United States supplied about 10 million dollars worth. Two factors now diminish this flow from America, that is, refusal of priority ratings and export licenses and the dearth of United States dollar exchange. In regard to the first factor, I suggest that Thailand be allowed the same range of exportable articles as the Netherlands East Indies and that the requisite priorities and export licenses be granted to permit the exportation of 10 million dollars worth of licensed commodities.94 Goods not subject to priority rating [Page 308] nor license need not be considered in this connection. Government purchases and replacements and spare parts for all types of American equipment already in use would naturally rank first in importance. The Thai Government should be strictly enjoined to utilize its existing system of export licenses to prevent transshipment. As regards the acquisition of dollar exchange with which to pay for these goods, it is to be noted that first of all there is little if any free dollar exchange available for open market purchase and secondly what fluid capital Thailand possesses is locked up behind sterling balances. For exports to Japan Thailand is in effect paid in gold bullion which is promptly utilized as coverage for further note issue while for exports to Malaya it receives sterling or its equivalent in Straits dollars. The British might be persuaded to hand over to Thailand the United States dollar exchange resulting from the resale to the United States of Thailandese tin and rubber as they did once before and if the United States made direct purchases in this country credits would be established. However, these sources would probably be inadequate and I suggest that to meet the deficiency the Export-Import Bank set up commercial credits up to say $5,000,000 per annum repayable after the war.95 In discussing this possibility informally with me financial adviser Doll96 has pointed out that the Thai Government has a spotless record in financial dealings and that the country has an extremely favorable trade balance in consequence of which the interest on the credit could justifiably be very low.

8. Another measure calculated to have a profound effect in preventing Thai drift toward Japan would be to allow this country to purchase some military planes plus equipment and military aviation gasoline from the United States. The Naval and Military Attachés to this Legation have received urgent requests from the Thai military authorities for 24 Brewster Buffalo fighters and the Attaches strongly recommend that an allotment of say one squadron of 9 planes with three replacements be granted. They state they are informed that there are still uncrated at Singapore many more of these planes than the British can utilize with the trained pilots they have and they believe that it is very desirable to erase the resentment remaining from the requisitioning of the Thai planes at Manila last year. Brooke-Popham97 urged me to recommend to the Department that a [Page 309] few military planes be sold to the Thai and the British Minister is said to have [urged?] so likewise, adding the request that, if not essential, the Thai be informed that the transfer was made at the expense of allotments to the British. If compensation has been paid for the requisitioned planes, the Thai Government presumably has almost enough funds in the United States to pay for 12 planes. This allotment would not affect the military situation but would, it is believed, gain for us the undying friendship of the military party here, which is very influential.98

9. These recommendations are the product of careful thought on my part; they are also endorsed by all the officers of the Legation staff, who had thoroughly studied the situation before my arrival. Since 1932 the Thai Government has been professedly democratic in principle; English is the second language of the Thai; strong affiliations over many decades have bound the Thai to the Americans and the British. From the outlook here it would seem entirely possible by a cautious and comparatively inexpensive [policy?] and [with?] some degree of persuasion to retain these bonds in full force. On the other hand should the Japanese in the absence of opposition achieve economic, moral and political ascendency over the one remaining independent and “neutral” nation of East Asia the detriment to our national policies in the Far East would be felt for years to come.99

10. In conclusion the proposed program carries with it promise of incidental benefits of American interests of considerable importance. For example one local American firm which has been transacting millions of dollars of business annually but is now about to close its doors would be able to survive as a valuable national asset and a permanent market for millions of dollars of American products would be retained which otherwise might be lost.

  1. In a memorandum dated October 10, the Assistant Chief of the Division of Far Eastern Affairs (Adams) reviewed Mr. Peck’s recommendations. In a marginal notation beside this point the Assistant Secretary of State (Acheson) observed: “This, I think, is too broad and too general. Specific action seems to me better. D. A.”
  2. Marginal notation written by Mr. Acheson in the Adams memorandum: “No objection if it proves necessary to move what can be actually exported. D. A.”
  3. British Financial Adviser to the Thai Government.
  4. Sir Robert Brooke-Popham, Air Marshal of the British Royal Air Force and Commander in Chief, Far East.
  5. In the Adams memorandum there were three comments on this recommendation of Mr. Peck. Mr. Acheson wrote: “The value of this recommendation seems to me largely psychological, and should be weighed in the light of the comparative needs of Britain, China, and Russia. D. A.” The Chief of the Division of Far Eastern Affairs (Hamilton) wrote: “In view of scarcity and needs elsewhere, I am dubious of the advisability of endeavoring to supply airplanes to Thailand. Possibly one or two might be supplied. We should, I feel, try to keep the Thai Government ‘sweet’. M. M. H.” A notation by the Adviser on Political Relations (Hornbeck) indicated concurrence in Mr. Hamilton’s statement.
  6. Mr. Adams, in his memorandum of October 10, initialed by Mr. Hamilton, stated that the Division of Far Eastern Affairs “concurs in general with Mr. Peck’s estimate of the problems confronting Thailand and concurs in principle with the three specific recommendations made by Mr. Peck.”