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