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.