The Secretary of Defense (Johnson) to the Secretary of State
Dear Mr. Secretary: The Joint Chiefs of Staff have expressed extreme concern over lack of controls on sources of supply of petroleum [Page 655]products for Communist China, North Korea, and the USSR maritime provinces. I understand that you and the Secretary of Commerce are aware of this problem, and that in effect, shipment of petroleum products from the U.S. to these areas has been embargoed, and that the principal U.S. controlled foreign suppliers, Caltex Company and Standard Vacuum Company in Hong Kong, have voluntarily embargoed all petroleum products to these areas. The remaining large supplier of petroleum products to Communist China from Hong Kong is the British controlled Shell Company. While the U.S. Consul General, Hong Kong, has reported that the Shell Company had informed him that its policy permitted only export of normal quantities of petroleum products to South China, information derived from Department of Defense sources discloses that the Shell Company of Hong Kong intends to ship in the immediate future 13,500 barrels of motor gasoline to Tsingtao and Tientsin. Both of these destinations are in North China adjacent to North Korea and it appears reasonable to assume that these and other shipments to this area will directly or indirectly contribute to North Korean capabilities.
I recommend, therefore, as a matter of urgency, that the strongest possible representations be made to the British Government to obtain from them action to effect embargo on all petroleum products to Communist China, North Korea, and USSR maritime provinces available to them from British controlled sources.