Japanese take over in Indochina, escalating tensions

U.S. Department of State (July 24, 1941)

740.0011 Pacific War/482

Press release issued by the Department of State

July 24, 1941

In response to inquiries by press correspondents, the Acting Secretary made the following statement:

It will be recalled that in 1940 the Japanese Government gave expression on several occasions to its desire that conditions of disturbance should not spread to the region of the Pacific, with special references to the Netherlands East Indies and French Indochina. This desire was expressly concurred in by many other Governments, including the Government of the United States. In statements by this Government, it was made clear that any alteration in the existing status of such areas by other than peaceful processes could not but be prejudicial to the security and peace of the entire Pacific area and that this conclusion was based on a doctrine which has universal application.

On September 23, 1940, referring to the events then rapidly happening in the Indochina situation, the Secretary of State stated that it seemed obvious that the existing situation was being upset and that the changes were being achieved under duress. Present developments relating to Indochina provide clear indication that further changes are now being effected under duress.

The present unfortunate situation in which the French Government of Vichy and the French Government of Indochina find themselves is, of course, well known. It is only too clear that they are in no position to resist the pressure exercised upon them.

There is no doubt as to the attitude of the Government and people of the United States toward acts of aggression carried out by use or threat of armed force. That attitude has been made abundantly clear.

By the course which it has followed and is following in regard to Indochina, the Japanese Government is giving clear indication, that it is determined to pursue an objective of expansion by force or threat of force.

There is not apparent to the Government of the United States any valid ground upon which the Japanese Government would be warranted in occupying Indochina or establishing bases in that area as measures of self-defense.

There is not the slightest ground for belief on the part of even the most credulous that the Governments of the United States, of Great Britain, or of the Netherlands have any territorial ambitions in Indochina or have been planning any moves which could have been regarded as threats to Japan. This Government can, therefore, only conclude that the action of Japan is undertaken because of the estimated value to Japan of bases in that region primarily for purposes of further and more obvious movements of conquest in adjacent areas.

In the light of previous developments, steps such as are now being taken by the Government of Japan endanger the peaceful use by peaceful nations of the Pacific. They tend to jeopardize the procurement by the United States of essential materials such as tin and rubber which are necessary for the normal economy of this country and the consummation of our defense program. The purchase of tin, rubber, oil or other raw materials in the Pacific area on equal terms with other nations requiring these materials has never been denied to Japan. The steps which the Japanese Government has taken also endanger the safety of other areas of the Pacific, including the Philippine Islands.

The Government and people of this country fully realize that such developments bear directly upon the vital problem of our national security.


The Pittsburgh Press (July 24, 1941)

JAPANESE TAKE OVER IN INDOCHINA
By Robert P. Martin, United Press staff writer

Shanghai, July 24 –
Japan is preparing to land troops this weekend on the southeast coast of French Indochina within striking distance of the Philippines, Singapore and the rich Netherlands East Indies, foreign intelligence advices indicated today.

These advices were borne out by guarded private dispatches from Tokyo which indicated that Japan, now under a rigid censorship, would announce the occupation of Indochina as an accomplished fact at least by Monday.

In Vichy, an official French spokesman said France has agreed to Japanese demands for virtually complete military control of French Indochina to “save it from the British,” allowing the Japanese to occupy bases “temporarily.”

French authorities in Indochina likewise imposed a blanket censorship. Manila reported that no replies had been received for the last 24 hours to queries sent there.

A Japanese embassy spokesman announced that foreigners here would no longer be given accomodations on liners bound for Japan. He said that reasons of the ban were not known.

Intelligence reports received here indicated that Japan, as its first move, intended to land small forces, sent down the China Sea, from Canton, at Saigon, the big Indochina base on the southeast coast.

Saigon is about 700 miles from the nearest of the Philippines group and about the same distance from Singapore and the Netherlands East Indies.

A United Press Batavia dispatch said a three-day air raid blackout drill had been ordered for that capital of the Netherlands Indies, starting Saturday. At the same time, there will be technical staff maneuvers near Batavia:

…to test liaison in respect to the means by which a land invasion would be repelled in this area.

It was believed certain that Japanese naval forces would take possession of the great Cam Ranh naval base, up the coast from Saigon. Cam Ranh is in one of the best natural harbors in the world.

Probably peaceably

The occupation probably will be peaceable because the Vichy government, for one thing, has consented, and for another, has not the forces, even it had the disposition, to oppose.

Belief was that Japan would now be content for the present and would consolidate its new position and await the outcome of the grand-scale battles between Russia and Germany. Then, it was said, Japan would make its decision regarding an attack on Russia’s Far Eastern army.

Diplomatic reports indicated that Japan’s basic policy remained as it had been – expansion to the south and settlement of the war in China. As regards Siberia, it was held that Japan was anxious over the possibility of German domination there, the implication being that, while Japan had taken Germany for a diplomatic friend, it might not like Nazis as neighbors.

Expects no U.S. opposition

Indications were that Japan expected no actual opposition from Britain to its occupation of Indochina and that it intended to follow up its gains by putting pressure on Thailand, which is British Burma’s neighbor. In dealing with Thailand, it was said, Japan would seek badly-needed economic concessions and air force bases from which to attack the Burma Road, China’s lifeline of supply.

Japanese sources circulated reports that General Sir Archibald Wavell, new British commander-in-chief in India, had arrived in Chungking, the temporary Chinese capital, and had conferred with Sir Archibald Clark Kerr, the British ambassador, and General Chiang Kai-shek, China’s leader.

According to these sources, General Wavell intended to continue on to Moscow.

London said the report of Wavell’s arrival at Chungking was untrue.

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JAPANESE WARSHIPS APPEAR OFF INDOCHINESE CITIES

Saigon, French Indochina, July 24 (UP) –
Japanese warships have appeared off the great French naval base of Cam Ranh, it was reported today, and an official announcement that Japan will occupy strategic bases in Indochina was expected tonight or tomorrow.

There has still been no public announcement here, however, that agreement has been reached to permit the Japanese to move in.

Japanese warships were said to have been sighted all along the southern coast, including the vicinity of Cap Saint-Jacques, entrance to the port of Saigon.

Numerous Japanese freighters in the port of Saigon resumed the loading of cargo this morning when it became apparent that the evacuation of some 200 Japanese civilians here would not be necessary because of the conclusion of the Franco-Japanese agreement.

The bulk of the population was in the dark as to the actual situation because of the absence of an official announcement.

Heavy censorship has held up transmission of all dispatches from French Indochina for more than 24 hours. The wording of this dispatch would indicate that the French and Japanese have now agreed finally on all details of the Japanese occupation.

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NAZI RUBBER SUPPLY SOURCE MENACED
By Helen Kirkpatrick

London, July 24 –
Should the British Empire and the United States decide to apply economic sanctions against Japan, it will not only seriously affect Japan’s wartime economy, but Germany’s as well.

Germany’s chief means of obtaining supplies from the Western Hemisphere has been through Vladivostok. Now that that port is closed, Germany has become almost totally dependent on Indochina for rubber.

Are the Japanese going to allow Germany to continue to import that rubber, or does Japan need it herself? Have the Japanese gone to Indochina with Germany’s full approval, or only with her reluctant consent?

Unless the Germans and Japanese have concluded an agreement, the Germans may find themselves faced with a serious rubber shortage.

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INDOCHINA FLIES JAP FLAG AS TOKEN OF 'SALVATION’
By Robert Bellaire, United Press staff writer

Tokyo, July 24 –
Newspapers reported today that the Japanese flag had been raised beside the French flag at Hanoi, French Indochina, and Haiphong, its port, in indication that:

Indochina sees collaboration with Japan as its only salvation.

A government spokesman said no information had been received or “reports” that Japanese forces had already occupied strategic points in southern Indochina.

Baron Guy Fain, counselor of the French Embassy, conferred for 20 minutes this morning with Kumaichi Yamamoto, acting Vice Foreign Minister, as confirmation was awaited that the Vichy government had agreed to Japanese plans to take over Indochinese bases.

Announcement awaited

There are indications that an announcement “of great importance” would be made this weekend.

Shippers were now refusing information regarding arrivals or departures of Japanese ships, and newspaper advertisements or shipping lines had been suspended. Japanese authorities were understood to have curtailed travel by foreigners in Japan and it was reported that the ports of Kobe, Shimonoseki and Nagasaki (all are naval bases) were virtually closed because of [CENSORED]

Informants said that reports of extensive Japanese naval movements to the south were probably correct.

Panama Canal "closed"

A Washington dispatch of the Dōmei news agency said that Admiral Kichisaburō Nomura, ambassador at Washington, had discussed the Indochina and the Panama Canal situations with Acting Secretary of State Sumner Welles and that Mr. Welles had told Nomura that the canal would be closed indefinitely due to “repairs.”

A government spokesman said that Japan was negotiating with the United States for passage of its ships through the Canal because other ships were believed to be passing through.

The newspaper Nichi Nichi, commenting on reports that the United States is likely to impose a complete economic blockade on Japan “depending on future changes in the Far Eastern situation” (that is, Japanese occupation of Indochina), said the United States would be hit harder than Japan.

For instance, it said, Japan had bought most of its oil recently from California, so that American producers would be hit.

Tokyo newspapers said that Chinese, British and Free French forces were going to enter Indochina immediately with American approval.

The newspaper Chugai reported that the United States and Britain had agreed on joint defense of Singapore, the Burmese port of Rangoon, and the Indian ports of Bombay and Calcutta, and that China was massing troops on the Burmese border preparing to put pressure on Thailand.

A Yomiuri dispatch from Singapore reported today that French Indochina authorities had forbidden departures of French-registered merchantmen for the last five days.

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VICHY AGREES TO LET JAPS ‘KEEP ORDER’ IN FAR EAST
By Ralph Heinzen, United Press staff writer

Vichy, July 24 –
The Vichy government has agreed to provide Japan with military and technical facilities in Indochina to enable it to “maintain order in the Far East,” Paris newspapers reported today.

There was rigid restriction here of all news on the Far Eastern situation, but the Paris press reported negotiations with Japan were still in progress, a basis of agreement had been established by which the Vichy government would concede the advantages Japan sought in recognition of Japan’s “predominance in East Asia.”

A government spokesman said that France would be allowed to share fully with Japan in the defense of French Indochina.

Admiral Jean Decoux, Vichy Governor-General of Indochina, and General Raishiro Sumita, chief of the Japanese military mission in Indochina, conferred for two hours in Hanoi examining details of Japan’s “strategic plan for temporary occupation of military positions,” it was reported.

A spokesman here said:

Recognition of Japan’s predominance in Eastern Asia does not mean that France will similarly recognize the position of any other power concerning French Africa.

Official spokesmen had insisted an agreement had been signed.

There remained no doubt, on the basis of the Paris press reports and statements by spokesmen here, that Vichy and Tokyo had agreed in principle on the right of Japan to use bases and only details remained to be considered.

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BRITAIN HELPLESS, WANTS U.S. TO ACT AGAINST JAPAN
By John T. Whitaker

London, July 24 –
Great Britain is ready today to join the United States in economic sanctions against Japan as a result of Vichy France’s agreement not to defend against Hitler’s Far Eastern ally.

Authoritative quarters said here today that Britain would not regard Japan’s new aggression as a military threat to Singapore.

Already on the defensive in more than half the globe, Britain does not expect American naval intervention, and cannot act alone against Japan.

In the British view, the acquiescence of Vichy France does not change the fact of Japanese aggression. It has been held in Washington as well as London that eleventh-hour submission by the victim does not change the nature of the crime.

Some shock was caused here, because it was recalled that Vichy’s Chief of State, Marshal Henri Philippe Pétain, had pledged his sacred honor as a soldier that the French Empire would be defended everywhere against any aggressor.

It is hoped here that the United States, in concert with Britain, will stop all purchases of gold from Japan, freeze Japanese assets, and place an embargo on essential exports from the United States.

To observers who feel that Japan’s entry into the war as a German ally against the United States is inevitable, it is difficult to understand how the Americans are still shipping crude oil to Japan.

There is no effort here to discuss British hopes that America will at last attempt an effective embargo.

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The Pittsburgh Press (July 25, 1941)

BASE TAKEN 'TO FORESTALL U.S. BOMBING’

Council meets to set up ‘protective’ regime over Indochina

By Robert Bellaire, United Press staff writer

Tokyo, July 25 –
Emperor Hirohito summoned his privy council to meet today in what was expected to make the beginning of the Japanese “protection” of French Indochina against alleged American and British machinations.

Japan was expected to reply to United States charges that her move against French Indochina is aggression as soon as occupation of Indochina bases has been announced.

Officials declined to comment on the statement by Acting Secretary of State Sumner Welles and the full text of Mr. Welles’ statement was not published because Japan has not yet announced occupation of southern Indochina.

To defend whole position

Unofficial Japanese who were aware of the full contents of Mr. Welles’ statement reflected Japanese displeasure and indicated that shortly a Japanese reply would defend the whole Japanese position in East Asia.

Iichi Kishi, government spokesman, said in discussing the general situation, that the fact of “American air bases in China” made it possible for the United States to bomb Japan if it wished to. He said that he lacked information of the exact situation and nature of the “American bases.” It was very difficult to confirm details of “Anglo-American encirclement,” he explained, unless the American and British governments gave Japan the information.

Seeks better relations

Explaining that he had received no confirmation of reports that the United States and Great Britain might freeze Japanese assets as a reprisal for the occupation of French Indochina, Kishi said that he could not comment.

He continued to say that Japan had never given up hope of improving relations with the United States, and that any attempts at improvement would not be contrary to Japan’s alliance with Germany.

Kishi said that the new cabinet had not given Russia renewed assurances of its friendship because that was unnecessary. The Russo-Japanese non-aggression treaty still stood, he said, and added:

However, we are always ready to give assurances to a friendly power with which we have treaty relations.

Japan has given assurances to Germany, Italy and the Nanking regime in occupied territory in China which it sponsors, that its policies of friendship with them were not altered.

Michiyo Iwamura, procurator general of the Supreme Court, was named Minister of Justice today.

Divided diplomatic corps

Admiral Teijirō Toyoda, Foreign Minister, gave his reception as the new incumbent to the diplomatic corps today. American Ambassador Joseph Clark Grew as dean of the corps was the first to see him. Representatives of 25 countries attended. Because of the war, it was necessary to provide three waiting rooms for them – Allied, Axis and neutral. The British and German ambassadors headed the belligerent delegations and Mr. Grew the neutral delegation.

A Dōmei News Agency dispatch from Los Angeles said that a party of Japanese members of Parliament, on a “goodwill” tour of South America, had decided to visit only the West Coast because Japanese ships were not being permitted through the Panama Canal. One member is to be sent to Brazil, however.

Newspaper comment

Newspapers (which frequently are inspired) devoted much attention to the United States and Thailand today. Though they charged that America, Britain and Russia were trying to encircle Japan, they emphasized that Japan had been “patient and cautious.”

Asserting that Japan desired to retain “whatever spark of friendship is left from old times,” Chugai asked:

Why should the United States find it necessary to intensify its economic blockade in order to cope with the Far Eastern situation?

The newspapers took the view that Japan was Thailand’s “big brother.” The Japan Times-Advertiser charged that Britain had concentrated forces on the Thailand border as a means of exerting pressure for a “less pro-Japanese and more pro-British Thai regime.”

It said:

External support as well as internal consolidation seems required by the Thai government. Internal consolidation should be so directed as to preclude anti-Japanese elements and prevent them from working their way into the central machine of administration or diplomacy.

The Times-Advertiser is subsidized by the Foreign Office.

Feared 'encirclement’

The Japan Times-Advertiser, controlled by the Foreign Office, said Japan’s newly acquired commercial rights in Indochina had been imperiled by encirclement of Indochina by British, American and Chinese interests.

It said the peace treaty between Indochina and Thailand, mediated by Japan, would also be:

…useless if subversive activities were proceeding in Thailand and if pressure were being placed on that state to take a hostile stand against Japan.

The newspaper said:

The serious situation calls for prompt action by Japan to offset the pressure of foreign powers interested in preventing Japan from securing supplies and working to reopen supply routes to Chiang Kai-shek. Obviously the whole of Indochina is in need of adequate defense which will guarantee the integrity of the region, its continued protection on behalf of the Vichy government and the maintenance of stability in Thailand, which is related to the issue.

’Fully warranted’

Japan would be fully warranted in countering hostile actions and in preserving the independence of these parts of the co-prosperity sphere. Japan would be remiss in its duty if it permitted offensive operations, endangering its own interests, to proceed.

The newspaper Nichi Nichi, in a Shanghai dispatch, said the Russo-German war had drastically altered the Russian stand in the Far East. Until war broke out, the newspaper said, Russia had been considered an integral cog in the Axis machine. It said:

The frenzied American attempt to extend military aid to the Soviets by the Pacific route has considerably enhanced chances for the United States openly arising in arms.

Many Americans and Britons in Tokyo were converting bank deposits into cash in view of rumors that the British and American governments were considering freezing Japanese credits. It was understood that the Japanese government had completed arrangements to retaliate.

Japanese newspapers gave prominence to Under Secretary of State Sumner Welles’ statement that any Japanese move on Indochina would be aggression, but did not comment.

A headline in the newspaper Kokumin said:

UNITED STATES STAND IN PACIFIC IS UNCOMPROMISING

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BRITAIN SETS UP DEFENSES IN SINGAPORE

Steps taken to meet new aggression by Japan

By Frederick Kuh, United Press staff writer

London, July 25 –
Foreign Secretary Anthony Eden told the House of Commons today that Britain regards Japan’s intention to occupy French Indochina as a potential threat to British territory and interests in the Far East and has taken certain defense measures in Malaya and Singapore.

Mr. Eden said that Japanese occupation of the French territory is imminent and that these actions by Tokyo are regarded as “new aggression.”

He said that the Japanese action was mediated and that British action in strengthening her Far Eastern position had been taken in closest collaboration with the United States, the Dominions and the Netherlands.

He called the definition of American position by Acting Secretary of State Sumner Welles salutary and most welcome.

Mr. Eden said in reply to a question that Britain’s defense measures in the Far East have already been undertaken, but that he did not desire to announce their nature since they concern other governments as well – an obvious reference to the United States.

Mr. Eden said that he was unable to day whether a joint declaration could be made by Britain, the Dominions, the United States, the Dutch East Indies and China that they would tolerate no further Japanese aggression not would he say whether he thought such a declaration would act as a deterrent upon Japan.

Asked if the move into Indochina threatened South Africa, he said it directly threatened territory much nearer.

He described Britain’s relations with China as unchanged and said that India, as well as the Dominions, had been consulted on the situation.

Mr. Eden said that the government had maintained diplomatic contact with China throughout the Japanese negotiations with the Vichy government for occupation of Indochinese bases.

Japan, he said, has achieved its objectives in southern Indochina by demands backed by threats of force if Vichy did not comply.

Mr. Eden said:

Vichy has subjected the French people to another humiliation by its acceptance of so-called Japanese protection against a non-existent threat.

Mr. Eden indicated strongly that Britain, the United States, the Netherlands, China and the British Dominions were in consultation on measures which might be taken in reprisal for Japan’s grab of bases within striking distance of the Philippines, Singapore and the Netherlands East Indies.

Freezing of Japanese assets, an embargo on Japanese exports and denial to Japan of goods she needs were among possible measures discussed in diplomatic quarters.

It was said in well-informed quarters that nothing more than economic pressure against Japan might be expected, but that this pressure might reduce Japan’s trade to a minimum.

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JAPAN ACTS TO PREVENT 'AMERICAN OCCUPATION’
By Robert P. Martin, United Press staff writer

Shanghai, July 25 –
Japan is occupying French Indochina to prevent the United States, China, and Britain from doing so, the Japanese Army newspaper Sin-Shun-Pao said today.

In an article which contained the first authoritative admission that Japan intends to occupy strategically valuable naval, aerial and land bases on Indochina, Sin-Shun-Pao said Japan was acting to forestall American occupation “which would permit the United States to operate against Japan” with the aid of China.

Great Britain and America were planning to obstruct the Japanese “new order” by taking over Indochina, it was added, and Japan was:

…faced with the necessity of nipping this malicious ambition.

Authentic advices from Tokyo indicated strongly that, despite delay in announcing agreement between the Vichy and Japanese governments on Japanese occupation, Japan had completed all its arrangements and would move into southern Indochina during the weekend.

It was believed here that the occupation would be an accomplished fact by Monday.

Rumors circulated here that American consular officials would evacuate certain areas of Southeast Asia. However, the American consulate general said the rumors were fantastic and probably arose from a State Department authorization to consuls in the Far East to ship furniture home for their families evacuated last year. Funds for shipment of the furniture had only recently become available, it was explained.

Japanese Army spokesmen denied reports that there had been a Russo-Japanese clash in the Changkufeng frontier area along the Siberian frontier.

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ROOSEVELT PROMISES REPRISALS TO MEET JAPANESE AGGRESSION
Government expected to freeze Tokyo’s assets in first action

America vs. the Axis
President Roosevelt today indicated that the first move by the United States to counter Japanese aggression in the Far East will come tomorrow in the form of freezing Japanese credits in the U.S.

Washington, meanwhile, speculated over what course United States reprisals against Japanese occupation of bases in French Indochina would take. The consensus was that the action would be strictly economic. One Senator, however, said the government is prepared to intervene with armed force if Japan threatens the Dutch East Indies.


Screenshot (472)
Japanese target? – Map shows how Japanese islands and Japanese-controlled areas in continent ring strategic Vladivostok, the Russian Far East port.

U.S. PLAN TO USE FORCE DENIED
By Lyle C. Wilson, United Press staff writer

Washington, July 25 –
Prediction by one United States Senator that our Navy and Air Force would help defend the Dutch East Indies against Japan were offset today by insistence of others that reprisals for aggression would be limited to the field of economics.

A senior member of the Senate Foreign Relations Committee told the United Press this country would not be likely to use force against Japan except to check a direct thrust at the Philippine Islands. He insisted that we lack adequate bases near the East Indies to support naval action against Japan, and said the British do not have enough force in the Far East to be of sufficient assistance. Neither Senator would permit his name to be used.

The Senator who forecast armed American intervention in event of a Japanese move to the Dutch East Indies said that the Army and Navy have studied the Far Eastern situation and are “fully confident” of their ability to defeat Japan in any conflict. He added that this country “could not tolerate from an economic or strategic standpoint” Japanese occupation of the East Indies.

High Army and Navy officials have estimated that 250 heavy American bombers based at Vladivostok could “utterly devastate” every major Japanese city, this source said. He pointed out that Japanese cities, which have never been bombed, are flat and “completely defenseless” from air attack.

The Senator said:

A combination of the United States, Russia, Netherlands East Indies and Britain would absolutely insure a walkaway as far as any conflict with Japan is concerned, our military and naval officials tell me.

American intervention in the event of a Japanese occupation of the East Indies, this Senator said, would be based upon strategic and economic factors. From the latter standpoint, he said, this nation is almost completely dependent upon the Indies for rubber and obtains a large share of its tin there.

He said:

From the strategic standpoint, Japanese occupation of the East Indies would place them in an excellent position for an attack upon the Philippines. The Philippines would be completely encircled as far as land bases go.

Unless this nation decides to abandon the Philippines, it could not tolerate Japanese domination of the East Indies.

Simultaneously economic action against Japan by the United States, Great Britain and possibly Australia was anticipated as the first countermove of the democracies against Japanese penetration into Indochina.

There was speculation that the United States would freeze Japanese assets in this country and Japan apparently feared that her ships might be seized as well.

Rooseverlt leaves capital

Any freeze order presumably would be issued from Hyde Park, NY, where Mr. Roosevelt arrived today for a long weekend. His departure last night somewhat quieted capital nerves because it was known he was not going if the United States seemed likely to be involved more directly and immediately in trouble.

Meantime, there were indications of an urgent desire to step-up the flow of aid to China and the Soviet Union, both of which would be important factors in anti-Japanese developments. Soviet Ambassador Constantine Oumansky called at the State Department yesterday as did Richard G. Casey and Neville Butler, ministers of Australia and Great Britain, respectively.

Aid for Russia

The Office of Production Management and the War and Navy Departments are making a check to determine what supplies can be rushed to the Soviet Union to aid in its defense against Germany.

The scope of United States assistance is limited, however, by the lack of shipping facilities and inadequate supplies of tanks, guns, planes, and other essential materials. It appeared likely that the major aid that this country can give at this time will be in the line of machine tools needed to keep Russian factories in operation.

Freezing Japanese credits here would almost complete the ocy circle around the Axis. All European credits have been frozen to prevent Germany or Italy from obtaining their benefits, although the orders have been relaxed on behalf of Sweden, Switzerland, Portugal, Spain and the Soviet Union.

Four front contest

The United States has blacklisted 1,800 forms and individuals in Latin America on charges that they were agents who funneled aid to Axis powers. The battle for South America is on, coincident with the economic battle against the Axis in Europe and Asia so that the United States is fighting a political and economic contest on four continental fronts: South America, Africa, Europe, and Asia.

Japanese appeasement is apparently ending or diminishing within 24 hours or so of an official acknowledgment that such a policy existed Acting Secretary of State Sumner Welles acknowledged that appeasement was in progress last month in a secret session of the House Foreign Affairs Committee, but reporters were not supposed to disclose that fact.

Appeasement explained

Mr. Roosevelt let it be known yesterday, however, in an address to members of the Volunteer Participation Committee. He referred primarily to the privilege Japan has enjoyed of exporting oil from this country. The alternative to permitting Japan to buy here, he explained, would be to cause her to go to the Dutch East Indies for her needs, perhaps with force. The policy, he said, had been to try to keep war out of the Pacific and it had been successful so far. He did not say definitely whether the appeasement policy now had been abandoned, but he referred to it always in the past tense.

His extemporaneous address came shortly after Acting Secretary of State Sumner Welles had charged Japan with aggression in undertaking the occupation of strategic points in southern Indochina which is nominally French. Mr. Welles said the Japanese move meanced the supply of vital raw materials to the United States. They include tin, which is obtained from the Straits Settlements, and wool from Australia. Moreover, Japan is moving into a strategic spot from which she could attack Singapore, the great British naval base, the Dutch East Indies, and the Philippines.

Effect on draft fight

Japan’s sortie apparently removes all doubt about provision of Congressional authority for Mr. Roosevelt tp keep selectees, National Guardsmen and reservists in service for the duration. One of the key factors behind that request was the Army’s anxious insistence upon a proper garrison on the island of Luzon, the great northern bastion of the Philippines group. Thousands of airplanes and adequate land forces are\ wanted there because if a sufficient United States force is based on Luzon, it could in emergency break the back of communications between Japan and Indochina.

Only 240 miles – less than an hour by fast interceptor-bomber planes – lie between Luzon and Formosa, Japan’s island colony off the Chinese coast. Japanese troops and supply vessels would have to come within air range of Luzon. Beyond Formosa, there is a narrow sea channel between that island and the mainland. The Army contends that such outposts cannot be adequately manned by short-term soldiers who must be brought home – and replacements sent out – at intervals of one year.

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’PEOPLE AWAKE TO DANGERS’
By T. F. Reynolds, United Press staff writer

Hyde Park, NY, July 25 –
President Roosevelt said today that Japan’s move into French Indochina is awakening America to full realization of the deadly peril of the international situation. He indicated that America’s first move to encounter Japan’s imperial expansion in the Far East may be expected tomorrow.

It appeared almost certain that the initial move would be an executive order, freeing Japanese credits in this country. The order probably will be announced in Washington.

America awakening

The events in the Far East, where Japan’s armed forces are moving into Indochina and potentially menacing the Straits Settlements and British supply lines, are bringing to America a greater awareness on the part of the public to the danger of the whole world situation, the President said.

Leaning back in an easy chair in his library, Mr. Roosevelt said that public opinion is swinging rapidly to a more complete realization of the dangers in which this country is involved. But as yet, he added, the public is not sufficiently cognizant of the perils of the situation.

No details on move

The country as a whole, he said, is no more completely aware of the dangers inherent in the Far Eastern situation than it is of the dangers of the war in the west – Britain’s death struggle with Nazi Germany and Russia’s stand against the Nazi blitz machine.

Mr. Roosevelt would not discuss the nature of the move expected for tomorrow but he did say definitely that he believes there will be something out of Washington tomorrow on the situation.

But there no longer were serious doubt that he would act soon to freeze Japan’s credits in this country – a move which almost certainly will bering similar retaliatory action from the Japanese government.

’Iffey’ question

It appeared obvious that Mr. Roosevelt was determined to feel his way cautiously in developing measures to counter the Japanese expansion. Although the freeze order was deemed certain, that order may be only the first of several countermoves in the immediate future.

Mr. Roosevelt was asked:

What does the Japanese move mean to the neutrality of the United States?

That question, the President replied, is difficult to answer.

There are so many things that have not happened in the Far Eastern situation, that the question at the moment is too “iffey” to merit reply. If there were one single line of Japanese policy that this country could be assured of being followed, he said, then definite American moves might be predicted.

But, he said with emphasis, we cannot now say what tomorrow will bring. We don’t know what today’s move will be, much less the move of tomorrow and that of the day after.

’People realize peril’

The President refused to amplify his statement of yesterday in which he admitted that Japan has been permitted to procure oil in the United States to lubricate her war machines simply as an “appeasement” measure to prevent the war from spreading into the South Pacific. He said he could not discuss that policy, and refused to indicate whether the countermoves would include an order cutting off Japan from American oil supplies.

Turning to the question of public realization of the perils of the situation, Mr. Roosevelt said he had received reports yesterday from a newspapermen, two magazine writers, a Cabinet member and others who recently had been through the country and had examined public opinion.

All agreed, he said, that there had been a tremendous change in public opinion since last March or April. People are far more cognizant of the inherent peril today than they were a few months ago, he said.

But, he continued, they are not yet sufficiently aware of the dangers they face.

Public awareness, he said, may be sharpened by the work of such groups as the Voluntary Participation Committee of the Office of Civilian Defense with whom he discussed the Japanese situation yesterday. The members of that committee, representing the nine Corps Areas of the United States, he said, will come in contact with literally hundreds of subcommittees, and thus can reflect the views

But he cautioned against trying to read too much into his words of yesterday. In that brief address, he significantly had used only the past tense in referring to this country’s policy of permitting Japan to procure oil supplies in this country. He used the past tense, he said, merely because he was describing what has happened up to the moment when he began that speech.


JAPAN IMPROVES POSITION FOR 'COMING SHOWDOWN’
By A. T. Steele

Hong Kong, July 25 –
Japan’s acquisition of naval, air and land bases in southern Indochina puts the Japanese militarists in an enormously improved position for the “coming showdown” in the Pacific. The net effect will be to push Japan’s advance base of operations 600 or 700 miles nearer Singapore, Malaya and Burma while at the same time adding strategic difficulties for the Netherlands East Indies.

The newest Japanese advance is vastly more serious in its implications than the earlier invasion of Tonkin in the northeastern part of the French colony. The purpose of the Tonkin occupation was to sever the supply line to China and force the Indochinese government into economic and political subservience. The present move, however, has the objective of driving a wedge deep into the Anglo-American-Dutch defense in the South Pacific and providing a more suitable jumping off place for further aggression in that area.

Japan’s trouble previously had been that her existing bases of Formosa and Hainan were too far from her ultimate objectives – especially Singapore – to make a quick stroke possible. Now the sole remaining buffer is little Thailand.

Despite steady an insistent Japanese pressure, the Thai government so far has refused to surrender bases or join in Japan’s new order. But with the Japanese Army and Air Force perched in Indochina, on the Thai border, and with the Japanese Navy fully controlling the Gulf of Thailand, how much longer will the helpless Thais be able to hold on?

The Thais are strongly linked economically with the British and there is a very real doubt whether the British could sit idly by if the Japanese should move an army or air force into that highly strategic country. These considerations may cause the Japanese to delay any decisive move into Thailand until and unless a showdown with the democracies becomes inevitable.

Japan gambles

It is evident that the Japanese are moving into Indochina on the assumption that neither Britain nor America had any intention of going to war over that French colony. It is a gamble – for, as military experts point out, there has never been a better opportunity for the democracies to call Japan’s hand than now while Japan is preoccupied with the Russian problem – but it is a gamble that the Japanese believe had to be taken.

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JAPANESE EXPECTED TO MOVE IN QUICKLY

Saigon, French Indochina, July 25 (UP) –
Official announcement of the Franco-Japanese agreement for Japanese occupation of French Indochina will be made on Tuesday, it was reported in reliable quarters today.

The agreement, it was said, will be announced simultaneously in Tokyo, Vichy and Indochina.

It was said, however, that under present plans Japan does not intend to send very large forces to Indochina.

Start of the occupation was believed imminent.


U.S. STANDS TO LOSE HEAVILY IN FREEZING OF ASSETS
By Merriman Smith, United Press staff writer

Washington, July 25 –
The freezing of Japanese assets by the United States would increase the total of Axis credits immobilized in this country to more than $700 million, officials said today.

Approximately $500 million in German and Italian credits were affected by President Roosevelt’s order June 14 freezing the assets of European countries.

A freezing order against Japan has been indicated in some government quarters ot counter the occupation of Indochina, which is imminent.

Available Committee Department reports fix Japanese assets in this country at $91 million in short-term investments and $40 million in direct holdings. These figures are no recent, however, and the Japanese were also reported to have some holdings here which would not be included in the reports because of indirect listings.

U.S. to lose heavily

The United States stands to be the heavier loser should Japan retaliate in the event this country freezes her assets. American holdings in Japan, according to Commerce Department reports, include $67 million ion short-term investment, $45 million in direct holdings and about $105 million in Japanese binds, most of which aere owned by residents of the Philippines.

The loss to American businesses could not be regarded as immediate, however, because dealings with Japan, as with the other Axis nations, have been under strict exchange control for some time.

The freeze order would strike a destructive blow at Japanese exports to this country.

The principal Japanese firms here which would suffer from the move would be the large exporters and financial institutions. Japanese industrial and manufacturing holdings in this country are negligible.

30 nations already affected

Japan would be the 31st nation to be placed under freezing controls. The administration policy of blocking assets of aggressor and conquered nations began April 8, 1940 with Norway and Denmark and reached a peak last month when President Roosevelt froze the assets of continental Europe.

When the general freeze order was issued, new regulations governing blocked assets were also put into effect, making patent rights, royalties, ships and their cargoes and a number of other income items subject to the controls.

It was assumed that a Japanese freeze order would apply to any ships they have in American harbors, accounting for the number of Japanese cargo boats reported standing off the Pacific Coast, waiting for definite word of United States action.

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BULLETIN

Vichy, July 25 –
The newspaper Le Cri du Peuple reported from Saigon today that Japanese warships, “double the number of British warships in Asiatic water,” have already arrived in Indochinese waters.


TOKYO REACHING FOR THAILAND NOW
By the United Press

President Roosevelt today revealed that American retaliation against Japan’s move into Indochina will come tomorrow. He did not say so in so many words, but it was strongly indicated that Japanese assets in the United States will be “frozen.”

Earlier the President, at Hyde Park, had said that the period of U.S. appeasement of Japan was being brought to an abrupt end.

In addition to the strong stand the United States is taking toward Japan, Great Britain called Japan’s move into Indochina a direct threat to Malaya and Singapore

Foreign Secretary Anthony Eden disclosed today that Britain has taken defensive steps at Singapore and Malaya to counter the potential threat of Japan’s move into French Indochina and it was learned that the British Dominions and probably the Dutch will join in imminent Anglo-American retaliatory measures against Japan.

An early announcement is expected in London aligning the whole British Empire squarely with the United States in any commercial and financial sanctions against Japan.

Thus it seemed obvious that the United States, the British Empire, Russia and possibly the Dutch East Indies and China are being slowly moulded into a great common front against the Japanese in Asia.

Significantly, the Japanese newspaper Nichi Nichi said that Japan must prepare for any eventuality in the Pacific because:

…the actions of the United States cannot be predicted.

The United States, the paper declared, seeks to preserve the old-world order of Anglo-Saxon dominance.

The Japanese meantime moved steadily toward occupation of their new Indochinese bases, which are (Thailand) and starting to beat the drums for similar Japanese action in that strategic South Pacific state, 700 miles closer to the vital tin, rubber and oil of Malaya and the Dutch East Indies.

Saigon reported that official announcement of the Franco-Japanese agreement for occupation of the bases by Japan will be made on Tuesday.

The Tokyo press was already switching its attention to Thailand.

The repercussions of Japan’s move into Indochina rippled all the way to Africa. The German-controlled Paris newspapers, which frequently afford a reliable indication of which way the diplomatic winds are blowing, took up a campaign for France to open immediate negotiations with “European powers” – an obvious euphemism for Germany – for a defense agreement concerning Dakar similar to that arranged with Japan for Indochina.

The Paris newspapers claimed that the United States is planning to occupy Liberia, the independent Negro republic on the West African coast, and alleged that this increased the danger of a hostile move against Dakar, French West Africa.

In line with the contemplated acceleration of U.S. aid to Russia, Harry L. Hopkins, Lend-Lease administrator now in London, and U.S. Ambassador John G. Winant conferred extensively with Ivan Maisky, Soviet Ambassador to Britain. Under Secretary of State Sumner Welles conferred in Washington with Konstantin Umansky, Soviet Ambassador to the United States.

Shanghai reported that the Japanese occupation of Indochina is expected to be an accomplished fact by the end of the weekend. In Tokyo, Emperor Hirohito summoned the Imperial Privy Council for a meeting, presumably concerning Indochina. The Japanese press claimed that the United States now has air bases in China from which American planes easily could bomb Tokyo, and Japanese spokesmen went out of their way to emphasize that Japan still wishes only the friendliest of relations with America.


HENRY GRADY GOING TO PHILIPPINES

grady

Washington, July 25 (UP) –
Henry F. Grady, former assistant secretary of state, will shortly go to the Philippines on a highly confidential mission which may include exploration of the troubled Far Eastern situation, it was disclosed today.

Mr. Grady, who is head of the American President Lines, will go as a special representative of Federal Loan Administrator Jesse Jones, ostensibly to investigate the economic plight of the Filipinos. Incidentally, however, he will feel out the general atmosphere in the Far East, and in the Philippines in particular, where American interests were said by Acting Secretary of State Sumner Welles to be menaced by Japan’s move into Indochina.

Details of Mr. Grady’s mission are being guarded carefully, and neither the RFC, the State Department, nor Mr. Grady would comment.

Mr. Grady succeeded Francis B. Sayre as assistant secretary of state, Mr. Sayre is now High Commissioner to the Philippines. Mr. Grady has been mentioned as a possible successor to Mr. Sayre if the latter should be recalled.

Impact of war upon the Philippines has been increasingly marked. Having lost their European markets, the Filipinos have been subjected to virtual “economic isolation” by the shifting of almost all commercial shipping from the Pacific to the Atlantic.


U.S. Department of State (July 25, 1941)

711.94/217813/18

Memorandum of a Conversation

Washington, July 25, 1941.

At the invitation of Colonel Iwakuro and Mr. Wikawa, Mr. Ballantine lunched with them at their apartment. Mr. Wikawa was late in arriving and the greater part of the conversation that ensued took place before Mr. Wikawa arrived. Colonel Iwakuro expressed regret that from the point of view of relations between Japan and the United States the situation has developed the way it has. He said that the question of Japanese occupation of bases in Indochina had been before the Japanese Government before he left for this country in February, and the underlying purpose of the effort to reach an understanding was to set in motion a trend away from southward advance and thus avert the possibility of such a step as had just now been taken. He thought that if there had not been a delay in reaching the understanding, which had raised in the minds of many Japanese leaders a suspicion that this Government was not acting in good faith — and Colonel Iwakuro hoped that I would understand that the Ambassador and his associates here had no doubt whatever of our good faith, the Japanese action in Indochina would not have occurred. He said that the British Government had recently put an embargo on the export of rice from Burma to Japan and that Japan has only French Indochina and Thailand to rely upon for imports of this foodstuff. He declared that his Government was apprehensive of the de Gaullist activities in south Indochina and that there was real danger of Japan’s supply of rice being cut off by disturbances created there.

Colonel Iwakuro went on to say that the Embassy had again last night received a third instruction from, his Government urging that an effort be made to resume conversations with this Government looking to an understanding. He said that while the resumption of conversations would not have any effect in influencing the Japanese Government to revoke its action in Indochina, the establishment of an understanding would be effective in stopping Japan from moving further south, providing that this Government did not take measures in the nature of embargoes or freezing of assets against Japan. If such measures were invoked by the United States he believed that Japan would have no alternative but sooner or later to go south to Malaya and the Dutch East Indies in order to obtain essential supplies. Colonel Iwakuro observed that the Ambassador, being of a gentle disposition, would not have expressed these views as positively as Iwakuro had. He suggested that, while he did not wish to be understood as making any request, he would be glad to talk himself with the Acting Secretary or the President if we should so desire. He said he and Mr. Wikawa had already obtained passage on the Tatuta sailing from San Francisco on July 31, although there was a possibility that their sailing would be deferred until the Asama Maru sailed early next month. He added, however, that they would be glad to stay longer if we should desire to resume conversations.

Mr. Ballantine said that our position on the matter of the Japanese occupation of Indochina had already been made quite clear and that he could not add anything to what the Acting Secretary had already told the Japanese Ambassador in regard to the position of this Government.

Colonel Iwakuro said that the Japanese Government had no intention whatever to interfere with the internal affairs of French Indochina and he could not understand why we regarded their action as any different from our occupation of Iceland, which, he said, was a puppet country following the German occupation of Denmark.

Mr. Ballantine said that there was no point in his arguing over the facts connected with the Japanese step in relation to Indochina, but he desired to point out that Iceland was a fully independent country and not a dependency of Denmark, although up to the time of the German occupation the King of Denmark was also King of Iceland. Mr. Ballantine said that according to his understanding the Icelandic Parliament had full constitutional authority to enter into agreements with foreign countries. Colonel Iwakuro suggested that we had been influenced by propaganda of third powers interested in preventing the consummation of an agreement between Japan and the United States.

Mr. Ballantine replied that this was not the case, but that, as stated in the Secretary’s oral statement of June 21, we had accumulating evidence that important elements in the Japanese Government desired Japan to pursue a course supporting Hitler in his movement of world conquest and that the only kind of an agreement with the United States which they desired would allow Japan to pursue such a course.

Colonel Iwakuro then went on to say that even though we could not profitably pursue conversations at the present time an opportunity might arise again in future, perhaps if Germany should vanquish Russia and move over to the Far East. He thought that under such circumstances the basis of our conversations might be different.

Colonel Iwakuro and Mr. Wikawa spoke warmly of our courtesies to them and expressed the hope that the Secretary would have no doubts about their sincerity and earnest desire to improve Japanese relations with the United States.

Mr. Ballantine obtained the impression that Colonel Iwakuro and Mr. Wikawa had no real expectation that conversations would be resumed and that their principal purpose was to fulfill their ideas of propriety. Accordingly Mr. Ballantine made no effort to argue with them at length.

JOSEPH W. BALLANTINE

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EXECUTIVE ORDER NO. 8832

Amendment of Executive Order No. 8389, of April 10, 1940, as amended.

By virtue of the authority vested in me by Section 5(b) of the Act of October 6, 1917 (40 Stat. 415), as amended, and by virtue of all other authority vested in me, I, Franklin D. Roosevelt, President of the United States of America, do hereby amend Executive Order No. 8389 of April 10, 1940, as amended, by changing the period at the end of sub-division (J) of Section 3 of such Order to a semi-colon and adding the following new sub-division thereafter: (k) June 14, 1941 China and Japan.

FRANKLIN D. ROOSEVELT
The White House
July 26, 1941


TREASURY DEPARTMENT
Office of the Secretary
July 26, 1941

AMENDMENT TO REGULATIONS

The Regulations of April 10, 1940, as amended (Sections 130.1 to 130.7), are hereby amended so that reports on Form TFR-300 shall be filed with respect to all property subject to the jurisdiction of the United States on the opening of business on July 26, 1941, as well as with respect to all property subject to the jurisdiction of the United States on the opening of business on June 1, 1940, and with respect to all property subject to the jurisdiction of the United States on the opening of business on June 14, 1941, in which on the respective dates China or Japan or ;any national thereof had any interest of any nature whatsoever, direct or indirect. Such reports shall be filed by the persons specified in Section 130.4 of the Regulations and in the manner prescribed in the Regulations.

E. H. FOLEY, JR.
Acting Secretary of the Treasury

APPROVED: July 26, 1941
FRANKLIN D. ROOSEVELT


U.S. Department of State (July 26, 1941)

894.5151/245: Telegram

The Ambassador in Japan (Grew) to the Secretary of State

Tokyo, July 26, 1941 — 5 p.m.
[Received July 26 — 9:45 a.m.]

1096.

During past several days officials from Ministry of Finance have visited American firms in Tokyo and demanded full and complete reports on all business and financial transactions, including details of bank balances, reserves and property holdings. Submission of these reports was demanded by July 25. Demands were also made for a detailed report on all personal property held by American individuals to be submitted by July 31. Apparently this procedure was initiated as prelude to the freezing of America’s credits in Japan as a retaliatory step against the anticipated freezing of Japanese credits by the United States.

GREW

741.942/54: Telegram

The Ambassador in Japan to the Secretary of State

Tokyo, July 26, 1941 — 9 p.m.
[Received July 26 — 1:47 p.m.]

1100.

In a note handed to the Japanese Foreign Minister this afternoon the British Ambassador served notice of the termination of the Treaty of Commerce and Navigation of April 3, 1911, between Japan and Great Britain, and of the conventions regarding commercial relations and trade and commerce between India, Burma and Japan of July 12, 1934, and June 7, 1937, respectively, on the grounds that these instruments can no longer be regarded as fulfilling the objects which the British, Indian and Burmese Governments had in view at the time of their conclusion. The note states that in accordance with the terms of the treaty and conventions the Treaty of Commerce and Navigation with Great Britain will expire 1 year and the conventions 6 months from today’s date.


The Pittsburgh Press (July 26, 1941)

NEW U.S. AND BRITISH BLOWS DUE AS THREE POWERS FREEZE FUNDS

Philippine armed forces pout under command of U.S. Army and Navy

By Harrison Salisbury, United Press staff writer

An Anglo-American financial and economic blitzkrieg hit Japan today.

Joint action in Washington and London to freeze Japan’s assets snapped the complex web of trade and finance that bound Japanese economy to the non-Axis world. The sanctions were imposed at the same hour Tokyo and Vichy made formal announcement of the agreement whereby Japanese forces are taking over French Indochina’s strategic bases.

Japan retaliated by ordering the freezing of American assets. Emergency sessions were held by financial and economic experts in Tokyo. The great Yokohama silk exchange suspended trading. Emperor Hirohito called a privy council meeting for Monday.

In what appeared to be a move directed against the growing menace of Japan in the Far East, President Roosevelt today ordered the armed forces of the Philippine Commonwealth to be put under the command of the United States Army and Navy.

London accompanied her freezing orders against Japan with abrogation of trade treaties with that country. This British action was largely a formality since the freezing of assets makes trade virtually impossible.

Tokyo insisted that the Anglo-American action was anticipated and that retaliatory measures would be imposed almost immediately.

It was doubted that the moves which bring trade between Japan and the United States, Britain, the Dominions, India and other British possessions virtually to a halt would lead to any immediate break in diplomatic relations.

Nor was there any intimation Japan was prepared to bring her expansive drives in the Pacific to an early halt.

The Japanese situation almost swept the Russian war from the front pages of British newspapers. It was believed by British experts that further actions would be taken and that the moves might bring Japanese industry to a complete halt. The Dutch government is expected to parallel the British and American moves.

Shanghai believed Japan would push on into Thailand. Retaliatory measures, it was suggested, might include Japanese moves at Shanghai, possibly a blockade of that great international trading center. Japan was expected, too, to intensify her drive against China and start bombing the Burma Road from Indochinese bases.

Saigon reported that Japanese planes and warships are expected to being occupying strategic points.

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WHEELER IN ACCORD FOR THE FIRST TIME

Washington, July 26 (UP) –
Senator Burton K. Wheeler (D-MT), currently engaged in a blazing feud with President Roosevelt over foreign policy, today approved the order freezing Japanese and Chinese assets in the United States.

He said:

I think the President did the right thing. You may say for me that I agree with him – for the first time.

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FREEZING OF JAPANESE FUNDS FIRST OF BLOWS AT ASIA

Washington, July 26 (UP) –
Further Anglo-American economic reprisals against the Asiatic member of the Axis were anticipated today as it was revealed that President Roosevelt’s order freezing Japanese and Chinese credits came too late to prevent substantial withdrawals of Japanese funds.

Great Britain, Canada, and the United States acted together in penalizing Japan for her move against French Indochina, characterized by this government as an aggression tending to endanger vital United States supply lines.

President Roosevelt’s order, issued last night, became effective at the opening of business today.

China’s assets were frozen at the request of Generalissimo Chiang Kai-shek:

…for the purpose of helping the Chinese government.

The order brought a sharp halt to all trade with Japan by placing all Japanese financial and import-export transactions under the control of the government.

Japan was prepared for economic action by the United States. This was evidenced by the hesitancy of Japanese ships to enter American ports this week and by the Treasury disclosure that there had been substantial withdrawals of Japanese funds from American banks during the last three days.

There were indications that the freeze order would be only the first in a series of economic blows at Japan.

Similar action against Germany and Italy June 14 was followed by the closing of American borders to Axis nationals. A blacklist of 1,800 individuals and firms in Latin America believed to have Axis connections was issued by the United States to back up the freezing order and further prosecute the economic offensive. German and Italian consulates in the United States were closed.

A White House statement accompanying the Japanese-Chinese order said the action was taken to:

  1. Prevent the use of the financial facilities of the United States and trade between Japan and the United States, in ways harmful to national defense and American interests.

  2. “Prevent the liquidation in the United States of assets obtained by duress or conquest.”

  3. “Curb subversive activities in the United States.”

Edward H. Foley Jr., acting Secretary of the Treasury, said China was included in the order to facilitate acquisition of capital by the Chinese Nationalist government and to protect China against Japanese use of assets controlled from occupied China.

Soon after the order was announced, the Treasury issued a series of general licenses completely freeing the Chinese government and the Central Bank of China friom freezing controls.

Under the order, permission of the Treasury will be required for an American to do business with Japan or any Japanese national. All Japanese assets in this country are automatically blocked and their status can be changed only under a license from the Treasury.

Ships can’t leave

Mr. Foley said there was no specific application of the order to Japanese ships in American ports. He added that such ships could not leave American ports until they had complied with emergency shipping controls administered by the Treasury.

Some leniency was expected toward applications for general licenses to meet customary business expenses such as the payrolls of Japanese firms in the United States, but applications of any importance will go before a government policy committee consisting of Mr. Foley, Assistant Attorney General Francis Shea and Assistant Secretary of State Dean Acheson.

Mr. Foley said a general license would be issued permitting Japanese nationals in the United States to draw $500 monthly from personal funds for living expenses. Japanese firms will probably be allowed to meet obligations, provided that funds are not transferred to accounts of other nations whose assets have been frozen or removed from the United States.

Oil shipments to Japan are subject to the new controls, depriving the Japanese war machine of its major source of petroleum. The order ended a two-year policy by the United States of permitting shipments of oil to Japan in an effort to forestall Japanese aggression in the South Pacific.

Informed officials said the impact of complete cessation of oil shipments to Japan would be heavy. Durting the first three months of 1941, the exports of Japan included 1,932,000 barrels of crude oil, 1,097,000 barrels of gasoline, 1,102,000 barrels of gas and fuel oil and 241,000 barrels of residual fuel oil.

Commerce Department figures more than a year ago valued Japanese assets in this country at about $131 million, but this figure was regarded as low because of certain types of indirect listings.

Mr. Foley told a press conference last night that oil shipments would require licenses in the same manner of all other exports to Japan. He declined to discuss the future policy toward such applications.

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JAPS FREEZE AMERICAN FUNDS, DISCOUNT ACTION BY U.S.
By Robert Bellaire, United Press staff writer

Tokyo, July 26 –
Japan today ordered the freezing of American assets in Japan in retaliation for similar U.S. action against Japan’s assets and credits in America.

The retaliatory decrees were announced after Finance Minister Masatsune Ogura had revealed Japan was prepared for a prompt reply to the Anglo-American freezing orders.

The Dōmei Japanese News Agency, in a dispatch from Tokyo received in Shanghai, reported that effective immediately special permission would be needed for all financial transactions involving American and Filipino nationals residing in Japan.

Ogura said Japan’s balances in the United States had been reduced so drastically in recent months due to the drying-up of Japanese-American trade that only a “very small” amount of Japanese funds were affected by President Roosevelt’s order.

The great Yokohama Silk Exchange closed today and Japan was notified by Britain that not only had all Japanese assets been frozen but all Anglo-Japanese trade treaties abrogated.

The Japanese freezing order affected many large American firms with numerous branches in Japan, including the Standard and Tidewater Oil Companies, the National Cash Register Co., the National City Bank of New York, the International General Electric Co. and many American motion picture firms.

The bulk of the funds of American business in Japan had already been tied up for a long period by Japanese exchange regulations prohibiting transfer of balances abroad.

Japanese official statements sought to minimize the effect upon the Japanese economy of the American and British freezing orders. Ogura maintained that the effect would be “comparative slight,” and Nobufumi Itō, cabinet spokesman, took the view that the United States would suffer more than Japan.

Itō said the United States misunderstands Japan’s “true intentions.” He said the Franco-Japanese agreement on Indochina was the same as the American arrangement to occupy Iceland. American actions, he said, will not affect Japan, but Japan will take countermeasures.

See lax enforcement

Newspapers said the United States action was relatively unimportant because Japan had anticipated them and had taken precautionary measures, including:

…the safeguarding and wise disposal of funds in America.

The press said the United States could not afford to sever trade relations completely with Japan and enforcement of the American measures would not be severe.

Sir Robert Craigie, British Ambassador, served notice on the Japanese Foreign Office of the abrogation of three trade treaties with Japan.

The Foreign Office said that, of the three treaties abrogated by the British, one could not be made ineffective for a year while the others required six months’ notice.

Joseph C. Grew, United States Ambassador to Japan, called at the Foreign Office late this afternoon and it was believed he was formally notifying the government of the freezing order.

Finance and foreign ministry chieftains had held a series of emergency conferences on what the newspaper Yomiuri, in a Washington dispatch called:

…a virtual declaration of economic war against Japan.

Stock exchange calm

The Tokyo Stock Exchange remained calm because traders had expected the freezing order. Traders said they believed the steps taken would tend toward complete suspension of trade relations between Japan and Britain and America but expressed doubt that Britain and America would formally suspend trade at once.

Talks with leaders

Emperor Hirohito received Ogura on audience as soon as the freezing orders were announced, and immediately afterward received Admiral Teijirō Toyoda, Foreign Minister, at the Imperial Palace.

It was announced the Japanese and Vichy governments had agreed to the “joint defense” of French Indochina, with French sovereignty over Indochina guaranteed.

Emperor Hirohito has summoned an extraordinary meeting of his Privy Council for Monday.

Though foreign correspondents were sharply restricted in their dispatches by the drastic state secrets act, it was possible to say that according to well-informed quarters the freezing orders alone amount to an almost complete embargo on Japanese trade with the United States and Britain, and that suspension of shipping services between Japan and the United States and Britain may result soon.

Officers to leave

As the news of the freezing order reached Tokyo, it was disclosed that nine United States Navy officers, attached to the embassy here in a non-diplomatic capacity mostly as language students, would leave for Manila and the United States in the first available ship.

The State Department has authorized members of the embassy staff to ship personal possessions home at government expense.

As Shanghai explained earlier this week, this step merely meant that the State Department now had funds to pay for these shipments. There were no funds available when, months ago, the families of many diplomatic and consular attachés in the Far East were sent home.

The Dōmei New Agency said:

The freezing was conspicuously an attempt to restrain Japan’s advance toward the construction of a new order under Japan’s immutable policy.

The Japan Times and Advertiser (which is subsidized by the Japanese Foreign Office) said:

This country has been under American economic pressure since 1937, but it has shown no sign of collapsing under the pressure.

621 Americans in Japan

There are 621 Americans, excluding American-born Japanese, left in Japan.

It was understood that many Americans would have for the United States soon, if they could get passage, because, the freezing would make business activities impossible.

Newspapers published extra editions during the lunch hour announcing the Franco-Japanese agreement in occupation of Indochina when the freezing order flash came first from Washington, then from London.

These extra editions gave the first hint to the Japanese public at large that Japan was moving into southern Indochina.

The French Foreign Ministry at Vichy today issued a communiqué announcing the conclusion of a Franco-Japanese agreement for mutual defense of Indochina.

The mass circulation Nichi Nichi displayed prominently a special New York dispatch which said that Japanese-American relations were “at an extremely strained point short of the worst possible development” as the result of America’s attitude toward Japan’s action in Indochina.

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EMPIRE-TOKYO TRADE PACTS THROWN AWAY

Program designed to bring Nipponese industries to standstill

By Edward W. Beattie Jr., United Press staff writer

London, July 26 –
Great Britain has notified Japan she is abrogating all trade treaties between British Empire units and Japan as a parallel step to the British-American freezing of Japanese credits, it was announced authoritatively today.

The United States abrogated its friendship treaty with Japan two years ago today because of its dissatisfaction with Japan’s actions in China against American interests.

The British action in abrogating all trade treaties between Japan and Britain, the Dominions and India was a formal step, in view of the assets-freezing order, but it emphasized reports on political quarters that America and Britain had taken only the first step in a program of drastic measures which would be calculated to bring Japabneser industries to an almost complete standstill soon.

To follow U.S. lead

Well-informed quarters forecast that Britain would soon follow America’s lead in freezing Chinese credits, with China’s consent, so that Japanese dummy banks in occupied China could not evade the economic cordon now erected.

United States and British freezing action is to be followed by the Netherlands, it was said in well-informed quarters, and the Netherlands only delayed its announcement because of negotiations being conducted with Britain and the United States.

It was believed that the Dutch government sought a collective security provision from Britain and Australia, especially so that it could count on support in rejecting all Japanese demands in the Netherlands East Indies.

Includes all Empire

It was emphasized that the freezing order extends to every dominion, to India, to very colony and protectorate, and that by the British and American orders, Japanese assets have been frozen in the greater part of the world, and especially in the parts of the world where Japan had obtained, and where only she can obtain goods essential to her domestic economy and war industry.

Japan’s import trade will be mostly cut off, it was said, because she cannot pay for purchases.

Speculation started here when, rather than whether, a trade embargo would follow.

Japan has been receiving Australian wheat and lead, Indian cotton, South African tanning extracts, Australian and Burmese zinc, Malayan iron, manganese and bauxite.

Iron stock believed low

Japan is believed to have been accumulating stocks for a long time but it is reported that her steel and iron store is small.

Japan has been selling about $125 million worth of silk to the United States and about $80 million worth of cotton textiles, chiefly to the British Empire, each year.

It was believed here that British and American action would disrupt Japan’s silk and cotton trade and result in grave social as well as economic problems, including a general dislocation of the Japanese labor market.

In peacetime, America, the Empire and the Netherlands have provided Japan with 86% of her essential materials.

War off front page

The freezing orders swept the Russo-German war from the first pages of London newspapers. Even some of the more conservative newspapers broke open their pages to publish editorials. The conservative Daily Telegraph said:

Japanese militarists who led their country to the interminable disaster of the Chinese war have for years past been seeking to escape from the follies of their policy by interference with British and American interests in the Far East.

Both nations have been very patient, but under the tuition of Nazi arrogance, Japanese militarists grew to open denunciation of our temerity in holding the base of Singapore and maintenance by the United States of a fleet in the Western Pacific…

In the economic field, Anglo-American retaliation can be made deadly.

The Daily Mail said:

Thus with no less time, deeds in the form, of trade blockade and frozen assets have been affected to supplement the words of warning already spoken in Washington and London.

The News Chronicle, Liberal Party organ, said:

Japan is one of the most vulnerable countries in the world to action of this sort.

Though she has for some time been pursuing a policy of maximum self-sufficiency, Japan’s long-run war making capacity is still extremely dependent on imports from abroad. Nopw the bulk of these will be cut off.

Appeasement is dead. R.I.P.

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JAPS’ FORCES DUE IN SAIGON

French ask Indochinese to be calm in crisis

By Kurt Steiner, United Press staff writer

Saigon, French Indochina, July 26 –
The Japanese military said today that their planes and warships will move into French Indochinese bases over the weekend, and the local French press called on the public to remain calm in the face of “extremely grave” developments.

No mention of the Indochinese crisis had been permitted in the newspapers here until today.

The Saigon newspapers announced the imminent Japanese occupation and the conservative newspaper L’Opinion, said that:

Again Indochina is front page news but there is no reason to be particularly satisfied and we would rather be without such prominence because it means there is danger ahead.

The newspaper said the government had made no statement previously because it was sparing the public any uneasiness.

Troops are expected to arrive Wednesday.

Informants said the Japanese Air Force would be limited in numbers for some time because of the lack of suitable airfields in southern Indochina.

A small number of warships, possibly four destroyers for the Saigon area and a cruiser and three destroyers for the Cam Ranh naval base, are due at any time, a Japanese naval informant said. Some units of the Jap fleet were already reported at Cam Ranh.

30 Americans there

There are about 30 Americans, all men and mostly oil men, still here. All women and children have left.

Observers here said British interests in Indochina, except for the Shell Oil Co., were unimportant. But Indochina has been an important source of food supplies for the British crown colony of Hong Kong and it was believed this traffic would be cut off.

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JAPS PREPARE TO RETALIATE, DRIVE ON THAILAND

Blockade of Shanghai seen as Tokyo sets Aug. 15 as 'Der Tag’

By Robert P. Martin, United Press staff writer

Shanghai, July 26 –
Japan is preparing prompt retaliatory measures against Anglo-American freezing of Japanese credits, is determined to pursue its southward expansion policy whatever the consequences, and is already planning a drive against Thailand, it was understood in authoritative quarters here today.

The Dutch government, on behalf of the Netherlands East Indies, was expected to announce the freezing of the important Japanese assets in Dutch colonial territory at any time.

Announcement by the U.S. and British governments that all Japanese assets in American continental and territorial areas and throughout the British Empire had been frozen came as the Japanese and Vichy governments announced they had arranged for the “joint defense” of French Indochina.

Japan to act Aug. 15

Authentic advices from Tokyo said Japan was already preparing to extend its drive to Thailand, on the borders of Burma and the Malay Peninsula, and the Japanese military hierarchy had set Aug. 15 as the tentative day for action.

Japanese and American quarters here and at Manila believe it is inevitable that Japanese-American and Japanese-British diplomatic relations would be formally severed.

A Japanese embassy spokesman intimated that Japanese authorities throughout the Far East would adopt individual retaliatory measures against Americans and Britons while awaiting formal action on Tokyo.

There were reports that one of the first formal retaliatory measures would be a blockade of Shanghai, However, Japanese sources doubted that this would be done unless the U.S. and Britain first barred Japanese ships from their ports or detained Japanese ships now in their territorial waters.

Refers to Iceland

The Japanese spokesman said:

Action such as Japan has taken is not without precedent.

This was a reference to the U.S. occupation of Iceland.

Japan would now seek both economic concessions from Thailand and air force bases from which to bomb the Burma Road, China’s lifeline of supply, and to menace Singapore, it was reported.

The Japanese High Command was expected to order an intensified drive in China at once in an attempt to bring the war to a speedy end.

Claim U.S. unprepared

It was known that Japan was massing men urgently in Korea, Manchukuo and Inner Mongolia on the frontiers of Siberia and Russian-protected Outer Mongolia. After Thailand, diplomatic informants reported, Japan would be ready for Siberia.

The newspaper, Central China Daily News, organ of the Japanese-sponsored Nanking regime, said today that the freezing of Japanese assets would force Japan to seize the Netherlands East Indies, thus forcing the U.S. to abandon the Netherlands Indies to their fate “or to fight Japan.” It added that the U.S. was not yet prepared to fight.

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