40 Mr R. G. Casey, Minister to the United States, to Department of External Affairs

Cablegram [176] [1] WASHINGTON, 29 July 1940, 11.28 p.m.

Repeated London No. 64.

My telegram No. 168 repeated to London No. 62. [2]

Proclamation issued on 26th July made export of aviation spirit and lubricating oil and certain prescribed scrap metals subject to licence.

I was informed today that whilst licences for export to British countries will be issued, no licences will be issued for exports to any non-British countries, notably Japan and the U.S.S.R., and that these countries have been so advised.

Result may be that Japan will seek increased supplies of aviation spirit from the Netherlands East Indies.

As I reported in my telegram under reference, decision to make these products subject to licence was taken without knowledge of State Department. Lothian [3] and I have gradually pieced together the story. Proposal originated from the fact that Japan was attempting to place large orders for aviation spirit in the United States and from assumption that Japan was short of petroleum reserves. Although subsequent enquiry showed this assumption to be incorrect, the idea of an embargo had meanwhile gained the approval of the President [4] and some of his advisers and from well-intentioned but precipitate motives was forthwith given effect to.

The State Department is now trying to make the best of a situation which has unpleasant possibilities but from which they say they do not anticipate serious results. The State Department making clear to interested parties that proposal originated with the United States and not from British sources.

CASEY

1 The number has been inserted from the Washington copy on file AA:A3300, 43.

2 Dispatched 26 July. See file AA:A3300, 43.

3 U.K. Ambassador to the United States.

4 Franklin D. Roosevelt.

[AA:A3195, 1940, 1.6054]