Foreign Relations of the United States Diplomatic Papers, 1939, The Far East, Volume III

793.94/14694

Mr. John Garter Vincent of the Division of Far Eastern Affairs to the Adviser on Political Relations (Hornbeck)

[Washington,] January 20, 1939.

Dear Dr. Hornbeck: [Here follows discussion of the use of economic measures to support foreign policy.]

Mild measures of economic pressure to be applied to Japan have been frequently discussed and readily occur to mind: abrogation of the 1911 Commercial Treaty,³⁷ denial of financial assistance to Japan, modification of Section 338 of the Tariff Act of 1930³⁸ to allow for restrictions upon Japanese imports into this country because of discriminations against us set up by Japan in Manchuria and China, curtailment of shipment of certain war materials to Japan, et cetera.

The question naturally arises: Can these—would these—measures get Japan out of China? The answer is no. It is believed that nothing short of defeat in war would, within the foreseeable future, “get Japan out of China”. But the objective of the measures contemplated is not to “get Japan out of China”, as desirable an accomplishment as that would be. The objective is to prevent Japan from consolidating her position in China and drawing sufficient strength therefrom to allow for further aggressive action in other fields which would seriously menace our interests and probably lead us to war.

Also to be considered in connection with the measures contemplated and their objective is the very great importance of there being kept in existence an independent Chinese Government and an independent Chinese domain,³⁹ independent of Soviet Russia as well as of Japan, which would furnish the support and stimulus to continued Chinese resistance and serve to make insecure Japan’s position in the portions of China under its control, and which would prove distinctly troublesome to Japan should she become involved elsewhere. Financial assistance to the Chinese Government, in the form of rehabilitation loans, material credits, et cetera, would contribute substantially toward that end.

The employment of economic pressure raises of course the question of Japanese retaliation. The field of Japanese commercial retaliation is admittedly limited. Japan is now purchasing from this country only those commodities which are necessary to her and it is unlikely that she will stop making those purchases, unless prevented from doing so by us or by financial inability. In so far as action directed against American trade and interests in China is concerned, that trade and those interests are now receiving scant consideration and may be expected to receive less and less consideration, irrespective of action taken by us, as Japan becomes surer of her position in China. With regard to the fear that Japan might risk war with us—might attack the Philippines—in retaliation for economic measures taken against her, I find little in the situation to support such a fear. If Japan could find in the Philippines the means to counteract the losses occasioned by economic pressures; if the Japanese military were not fairly well occupied in China; if Japan did not have a potentially hostile Russia north of Manchuria—then a fear of war might be warrantably entertained, but it seems to me that, the situation being what it is, the very slight chance of involvement with Japan is one which we could and should take in order to attain the objectives outlined; that is, prevention of the development of a situation in which the chances of our becoming involved with Japan “would be measurably greater than would be the chances of our becoming involved in the present conflict were we now to render reasonable assistance to China”^* and adopt measures to decelerate the Japanese aggressive movement.

I believe that, in adopting the non-military economic measures envisaged, limited in scope and character to conform to our desire to avoid involvement in the conflict in China, we would, without danger and with small relative cost to ourselves now, be furthering objectives dictated by an enlightened national self-interest.

37. Foreign Relations, 1911, p. 315.
38. Approved June 17, 1930; 46 Stat. 590, 704.
39. Mr. Hornbeck, in a marginal comment at this point, stated: “This has been the American view for 100 years—at all times. SKH.” Mr. Vincent’s memorandum was submitted by Mr. Hornbeck to the Secretary and the Under Secretary of State.
40. My memorandum of July 23, 1938, addressed to you. [Footnote in the original; for memorandum, see Foreign Relations, 1938, vol. iii, p. 234.]