126 Mr R. G. Casey, Minister to the United States, to Mr John Curtin, Prime Minister, and to Dr H. V. Evatt, Minister for External Affairs

Cablegram 1021 WASHINGTON, 24 November 1941, 9.26-11.05 p.m. [1]

MOST SECRET [BRONX] [2]

My Nos 1013 and earlier telegrams. [3]

I was called to see the Secretary of State [4] today together with the British Ambassador, Chinese Ambassador and Netherlands Minister. [5] Secretary of State produced for us tentative draft of a counter proposal that he was considering making to the Japanese Government. Copies of this proposal were not available, but I made full notes.

After a suitable and rather lengthy preamble which contains nothing of immediate political importance, document then 'offers for consideration of the Japanese Government an alternative suggestion for a temporary modus vivendi' as follows:-

(1) Governments of United States and of Japan both being [solicitous] for peace of the Pacific affirm that their national policies are directed towards a lasting and extensive peace throughout the Pacific area and that they have no territorial designs therein.

(2) They undertake reciprocally not to make, from regions in which they have military establishments, any advance by force or threat of force into any areas in south east or north east Asia or in the Southern or Northern Pacific areas.

(3) Japanese Government undertakes forthwith to withdraw its armed forces now stationed in south Indo-China, and not to replace those forces; to reduce total in French Indo-China to the number there on July 26th 1941 which number, in any case, shall not exceed 25,000; and not to send additional forces to Indo-China for replacement or otherwise.

(4) The Government of the United States undertakes forthwith to modify the application of its existing freezing and export restrictions to extent necessary to permit following resumption of trade between United States and Japan in articles for the use and needs of their peoples:

(a) Imports from Japan to be freely permitted and proceeds of sale thereof to be paid into a clearing account to meet purchase of exports from United States listed below, and at Japan's option for payment of interest and principal of Japanese obligations within United States provided that at least two-thirds in value of such imports per mensem consist of raw silk. It is understood that all American-owned goods now in Japan, the movement of which in transit to the United States has been interrupted following the adoption of freezing measures, shall be forwarded forthwith to United States.

(b) Exports from United States to Japan to be permitted as follows:

(i) Bunkers and supplies for vessels engaged in trade here provided for, and for such other vessels engaged in other trades as the two Governments may agree;

(ii) Food and food products from United States subject to such limitations as appropriate authorities may prescribe in respect of commodities in short supply in United States;

(iii) Raw cotton from United States to the extent of 600,000 dollars in value per month;

(iv) Medical and pharmaceutical supplies subject to such limitations as appropriate authorities may prescribe in respect of commodities in short supply in United States;

(v) Petroleum. United States will permit export to Japan of petroleum on a monthly basis for civilian needs. The proportionate amount of petroleum to be exported from United States for such needs to be determined after consultation with British and Dutch Governments.

It is understood that by civilian needs in Japan is meant such purposes as operation of fishing industry, the transport system, lighting, heating, industrial and agricultural uses and other civilian use;

(vi) The above-mentioned amounts of exports would be increased and additional commodities added by agreement between the two Governments as it may appear to them as the operation of this agreement is furthering peaceful and equitable solution of outstanding problems in the Pacific area.

(5) The Japanese Government undertakes forthwith to modify the application of its existing freezing and export restrictions to the extent necessary to permit the resumption of trade between Japan and United States as provided in paragraph 4 above.

(6) The United States Government undertakes forth with to approach the Australian, British and Dutch Governments with a view to those Governments taking measures similar to those provided for in paragraph (4) above.

(7) With reference to current hostilities between the Japanese and Chinese the fundamental interest of the Government of the United States in reference to any discussions which may be entered into between the Japanese and Chinese Governments is simply that those discussions and any settlement reached as a result thereof be based upon and exemplify the fundamental principles of [peace], law, order and justice which constitute the main spirit of the current conversations between the Japanese Government and the United States Government, and which are applicable uniformly throughout the Pacific area.

(8) This modus vivendi shall remain in force for a period of 3 months with the understanding that the two parties shall confer at the instance of either to ascertain whether prospects, of reaching a peaceful settlement covering the entire Pacific area justify the extension of the modus vivendi for a further period. (This is the end of American counter proposal.) The Secretary of State said the above was a tentative draft on which he would like the views of our respective Governments at the earliest possible moment.

He repeated his appreciation of the urgency of the situation and that he might be called upon to meet the Japanese representatives again at short notice at any time. It was argued that whilst [maybe] 25,000 troops was an insufficient number to menace China from the south-east, the importance of specifying such a figure might be represented as condoning the presence of a force that had no right to be there beyond the number arranged between Japan and Vichy.

In reply the Secretary of State said [that] that might be so but he was searching for something that would not be a menace to China or anyone else and which Japan might possibly accept. If he stood out for the optimum we might well achieve nothing.

The Chinese Ambassador made a plea for the number of 25,000 to be largely reduced.

The question of policing the carrying out of such an agreement by Japan in Indo-China was discussed. The Secretary of State took the view that it would be unwise to attempt to insert a provision that would reflect in a derogatory way on the Japanese honour but that he believed that the British and American consular authorities in Indo-China would enable some reasonable supervision to be exercised.

The Secretary of State was clearly exercised in his mind at the prospect of his possibly having to make a decision on his own to present above counter proposals to Japanese representatives. He spoke quite forcefully of the necessity [for] our respective Governments to express themselves as early as possible on the general position that he had made known to us in last few days and in particular on this proposal.

He said that he did not want to have to rely solely on his own judgement in this important matter and that he was turning over in his mind whether or not he should take risk that was entailed in making such a counter proposal to Japanese representatives until our respective Governments had made known their views to him. The British Ambassador and I both said that our personal views were that if he believed continued silence on his (Secretary of State) part might encourage Kurusu [6] to depart for Japan we believed our respective Governments would wish him to use his own judgment as to terms of any such counter proposal to Japanese.

My personal view is that whereas above-quoted modus vivendi is rough and ready and its terms could be [evaded] by Japanese, the effect of any agreement (however temporary) of this sort having been entered into would represent a definite and desirable advance. The conclusion of such a modus vivendi would give us all some much-needed time if only by reason of fact that it would take a month to send their oil tankers to United States to collect the petroleum products.

I would appreciate your early advice.

1 This cablegram was dispatched in two parts.

2 Words in square brackets have been corrected/inserted from the Washington copy on file AA : A3300, 99.

3 Documents 116, 122-3 and cablegram 996 of 19 November on the file cited in note 2.

4 Cordell Hull.

5 Lord Halifax, Dr Hu Shih and Dr Alexandre Loudon.

6 Japanese special envoy to the United States.

[AA : A981, JAPAN 178]