The United States imposes an oil embargo

On Friday 1 August 1941 the White House issued a brief statement. President Franklin Delano Roosevelt had instructed the Administrator of Export Control, General Russell Maxwell, to impose further restrictions on the export of petroleum products “in the interest of national defense”. The statement announced two immediate effects. First, the export of motor fuels and oils suitable for use in aircraft, as well as the raw materials from which they were made, was prohibited to all destinations except the Western Hemisphere, the British Empire and “the unoccupied territories of other countries engaged in resisting aggression”. Second, exports of other petroleum products to countries outside that list were limited to “usual or pre-war quantities”, with licences to be allocated proportionally. The same evening the State Department revoked, with effect from midnight, all outstanding licences for the export of oil and oil products to countries outside the favoured group.

Japan was not mentioned in the statement once. It did not need to be. The countries of occupied Europe and the Axis states had long been cut off from American oil by the British blockade and by the June freezing of their assets, and the only large buyer of American fuel left outside the privileged circle was Japan, which imported about 80 per cent of its oil from the United States. Five days earlier Roosevelt had frozen Japanese assets in the United States. Taken together, the two decisions meant that from August 1941 not a single barrel of American oil reached Japan.

“Against the aggressors”

Some lists state that on this day the United States announced an oil embargo “against the aggressors”. That is how the step was remembered, especially in Japan, where it is still described as an oil embargo “on all aggressor nations” that also covered Japan. The American document, however, was built the other way round. It did not name the aggressors; it listed the countries that were still allowed to buy American fuel, and the ban applied to the rest of the world. A State Department telegram to the customs offices of 1 August spelled out the list: besides the countries of the Americas and the British Empire, licences were retained by Egypt, the Dutch East Indies, free China not occupied by the Japanese, and the Belgian Congo. The formula of countries “resisting aggression” was therefore the key to that list, not an accusation aimed at a particular state.

Behind this caution lay a policy Washington had followed for two years. An internal summary prepared in the State Department’s Division of Far Eastern Affairs on 31 July 1941 explained why Japan had not been cut off from oil earlier. Public opinion had long been opposed to sanctions, other oil-producing countries would not agree to an embargo without American military guarantees, and the Army and Navy commands warned that the United States was not ready for a two-ocean war. The fear was not so much a Japanese attack on America as that Japan, deprived of oil, would strike at the British and Dutch colonies in South-East Asia. That was why, from the summer of 1940, only the sale of aviation gasoline and scrap metal had been banned, while licences were issued for other fuels. The authors of the summary added that the situation had changed: the German–Soviet war had forced Japan to look over its shoulder to the north, the Americans had had time to rearm, and since the conclusion of the Tripartite Pact public opinion had hardened to the point of supporting even the freezing of Japanese assets.

From licences to a total embargo

The statement of 1 August did not yet amount to a ban on selling Japan any oil at all. Its content matched a plan that Acting Secretary of State Sumner Welles had put to the President in a letter of 31 July, which Roosevelt approved with the brief annotation “SW OK. FDR”. Welles proposed that Japan should receive no gasoline or oils suitable for aviation, nor the raw materials for producing them, but could buy ordinary fuels in quantities matching the normal level of 1935–1936. That was the President’s intention: to keep Tokyo guessing, ration supplies, and tighten or relax the course depending on Japan’s behaviour. Edward S. Miller, author of a study of the United States’ financial war against Japan, summed up the aim by saying that the freeze was meant to bring Japan “to its senses, not to its knees”.

In practice things turned out differently, because the controls had two tiers. Export licences were issued by the State Department, but every cargo had to be paid for, and Japanese money in American banks was frozen. Its release was decided by the inter-departmental Foreign Funds Control Committee, on which the State Department, the Treasury and the Justice Department were represented. The committee’s strongest figure was the Assistant Secretary of State for Economic Affairs, Dean Acheson, an advocate of a hard line towards Japan. A Treasury instruction of 7 August stipulated that the committee would reject applications for payment for metals, machinery, rubber, chemicals and wood pulp, and would withhold action on oil until an export licence had been issued. Yet when licences were issued, the money was still not released. The committee demanded that the Japanese pay in cash from outside the United States, in gold or from funds in Latin America; it piled up requirements and put off decisions.

American documents show how this worked in practice. Back in July the Japanese Navy had announced that the tanker Shiriya would call at Los Angeles on 9–14 August to load crude oil. On 6 August Secretary of State Cordell Hull replied to Ambassador Kichisaburō Nomura that the vessel could enter port and its crew could go ashore, but it would be allowed to take on oil only after obtaining two licences: an export licence from the State Department and a financial one from the Treasury. On 11 August the State Department informed the Los Angeles customs office that it had issued licences for certain petroleum products for Japan, “of course subject to” a financial licence being obtained. The Japanese never received that licence. According to Miller, as late as June 1941 Japanese firms held approved licences for 7.1 million barrels of gasoline and 21.9 million barrels of oil, worth some 50 million dollars – enough for months of supplies and, in the case of crude oil, for more than two and a half years. The freezing of dollars made them worthless at a stroke of the pen.

Historians disagree on whether Roosevelt knowingly allowed this outcome. Miller and some earlier scholars, such as Jonathan Utley, believe that the total embargo was the work of middle-ranking officials who exploited loopholes in the regulations, and that the President learned its full extent only at the beginning of September, after returning from his talks with Churchill, and concluded that backing down would look like weakness. Miller himself concedes, however, that the lack of documents makes it impossible to tell whether Roosevelt accepted the dollar freeze because it was forced on him or because it was exactly what he wanted. Hull, who in July and early August was taking a cure at White Sulphur Springs, told Welles by telephone on 2 August that the Japanese would probably have accepted a total oil cut-off as a deserved punishment for Indochina, and that the United States could have gone even further. He added that “nothing will stop them except force”, and that the whole question was how long one could manoeuvre before the war in Europe was decided.

Britain and the Netherlands acted in parallel. On 30 July Foreign Secretary Anthony Eden assured the House of Commons that nothing would now happen without a licence, and on 6 August he added that the freeze had been conceived in earnest and would be enforced in earnest. On 4 August Acheson agreed with representatives of London and The Hague that the American Standard-Vacuum and the Anglo-Dutch Shell would not apply for licences to export oil from the Dutch East Indies to Japan, leaving the decision to the authorities in Batavia. If the Dutch issued licences, Washington would agree to payment from the frozen Japanese accounts; if they refused, it too would refuse payment. Batavia issued no licences, and Dutch oil stopped flowing to Japan just as American oil had.

The Japanese in Saigon

War chronologies record under 1 August that the Japanese occupied Saigon. This was rather the completion of an operation that had been under way for several days. Under an agreement extorted from the Vichy government, troops of the Japanese 25th Army began landing in southern Indochina on 28 July, and over the following days, without firing a shot, they occupied the port and the airfields around Saigon, Cam Ranh Bay and bases in Cambodia. By the beginning of August the operation was essentially complete, and the army’s headquarters had established itself in Saigon. The American consul in Saigon reported on 5 August that the Japanese were occupying the bases with 40,000 troops or more, evidently intending to stay permanently, and that French sovereignty was henceforth “only a name”.

It was this move that set off the whole avalanche of American decisions. In Washington nobody believed Japanese assurances that the purpose was the “joint defence” of Indochina. Saigon and Cam Ranh lay a few hundred kilometres from Malaya, Borneo and the Philippines, and the new airfields in Cambodia put Singapore within reach of Japanese bombers. The natural next step seemed to be Thailand, through which ran the overland route to Malaya and Burma.

Warnings over Thailand

Fears for Thailand had been mounting since the end of July. The British learned from a secret source that in the third week of July the Japanese minister in Bangkok had presented demands to the Thai government: recognition of Manchukuo, renunciation of agreements harmful to Japan’s “co-prosperity sphere”, and military cooperation. The Thai Foreign Ministry denied that Japan was demanding bases, but Prime Minister Plaek Phibunsongkhram, who half a year earlier had owed Japan a favourable peace with France, told the British minister Josiah Crosby that he feared Tokyo’s growing pressure. The Americans had signals of their own. Japanese diplomatic correspondence, which they were reading thanks to “Magic”, had been foreshadowing a further advance southwards since July, and the resolutions of the Imperial Conference of 2 July named Thailand alongside Indochina.

The first warning was delivered in Washington on 31 July. Welles, acting on Roosevelt’s instructions, told Nomura that according to incoming information Japan was making the same economic and military demands of Thailand as it had recently made of France, that Thailand posed no threat to Japan whatsoever, and that the President’s July proposal for the neutralisation of Indochina now extended to Thailand as well. The next day Ambassador Joseph Grew conveyed the same message in Tokyo. On 2 August the British Ambassador, Lord Halifax, called on Welles together with the ministers of Australia and South Africa, and the British Embassy handed over London’s request in writing: if the United States warned Japan, publicly or diplomatically, that any further encroachment into Thailand or elsewhere would provoke an American response, Britain would take parallel action. Welles replied that Washington was awaiting Japan’s answer to the President’s proposal.

The British themselves did not intend to promise the Thais too much. Eden confidentially warned Washington that London doubted whether it could give Thailand military assistance, and instead advised Phibun to play for time, resist Japanese demands and make it clear that he would defend himself if force were used. On 5 August Phibun assured Crosby that he would not allow any foreign power to use bases in Thailand and would resist by force anyone who violated its neutrality. At the same time, however, under pressure from Tokyo, he recognised Manchukuo, which the Thai government announced in a communiqué, and Thai banks opened credits for the Japanese to buy rice and rubber.

On 6 August warnings were made publicly on both sides of the Atlantic. In the House of Commons, during a debate on the war situation, Eden declared that Britain had maintained friendly relations with Thailand for more than a hundred years and had no designs on it, but that it was no less true that any action threatening Thailand’s independence and integrity would be a matter of immediate concern to Britain, all the more so as it would threaten the security of Singapore. He added that as early as 31 July the British Ambassador in Tokyo had drawn the Japanese Foreign Minister’s attention to a press campaign accusing the British of intrigues in Thailand, couched in the same language as had preceded the demand for bases in Indochina. The same day Hull, asked at a press conference about Eden’s words, said that the United States had repeatedly made clear its attitude to conquest by force, including in the Pacific area, that “growing concern” over a move that would take in Thailand was understandable, and that everything Welles had said earlier about Indochina had “special application to Thailand”.

It is often written that the American and British governments warned Japan on this day against invading Thailand. In fact neither London nor Washington issued a formal note on 6 August. These were public declarations that carefully avoided the word “war”, preceded by a confidential exchange with the Japanese ambassador. Britain did not want to commit itself to anything it could not carry out without the Americans, and Roosevelt could not threaten war without Congress. A firm warning, agreed with Churchill, came only on 17 August.

The reply from Tokyo and Konoe’s proposal

Also on 6 August Nomura brought Hull, who had just returned to Washington, the long-awaited reply to Roosevelt’s July proposal. The government of Prime Minister Fumimaro Konoe and Foreign Minister Admiral Teijirō Toyoda gave assurances that the move into Indochina had been “entirely peaceful” in character and had been necessary to calm Japanese public opinion, inflamed by American, British and Dutch sanctions. Japan promised not to send troops into other countries of the South-West Pacific, to withdraw them from Indochina once the “China Incident” had been settled, and to guarantee the neutrality of the Philippines. In return the United States was to halt its military preparations in the region and persuade the British and Dutch to do likewise, restore normal trade, help Japan obtain raw materials, particularly in the Dutch East Indies, mediate in negotiations with Chiang Kai-shek, and recognise Japan’s special position in Indochina even after the troops had been withdrawn.

Hull put the document in his pocket without reading it. He told the ambassador that he was “frankly pessimistic”, because while the two of them had been seeking an understanding for months, the government-controlled Japanese press had been calling for conquest and accusing the United States of “encircling” Japan. He compared this with Germany, which, fighting hundreds of kilometres beyond its own borders in Russia, spoke of defending itself against aggression. On 8 August he handed Nomura his reply: the Japanese proposal did not answer the President’s. Nomura then, on instructions from Tokyo, asked whether a meeting of the two heads of government might be possible, for instance in Honolulu. Konoe, who after the asset freeze and the embargo realised that time was working against him, wanted to meet Roosevelt in person and reach an agreement that the diplomats could not conclude, and then impose it on the army by invoking the Emperor’s will. Hull replied that it was up to Japan whether it changed its policy enough for such a meeting to make sense. Roosevelt was not in Washington at the time. He was already at sea, on his way to meet Winston Churchill off the coast of Newfoundland.

Place in the war

The oil embargo of August 1941, although announced as a half-measure, proved one of the most important steps on the road to the Pacific War. As early as 31 July the Chief of the Navy General Staff, Admiral Osami Nagano, reported to Emperor Hirohito that oil stocks would last about two years, or a year and a half in the event of war. The Japanese Army General Staff, which as late as 26 July had noted in its diary that it did not expect a total embargo, later added in the margin that this had been a mistake by the whole General Staff and the War Ministry. From then on Tokyo counted the time left until the fuel ran out: every month of negotiations meant a fleet weaker by a further several hundred thousand tons of oil.

In mid-August, at the Atlantic Conference, Churchill pressed for a sharp joint warning that would speak of measures that might lead to war. Roosevelt toned it down. On 17 August, after returning to Washington, he handed Nomura a statement that if Japan took any further steps towards dominating neighbouring countries by force or the threat of force, the United States would be compelled “to take immediately any and all steps” it deemed necessary to safeguard its rights and security. At the same time he left the door open to talks and to a meeting with Konoe. On 24 August Churchill said of Japanese expansion in a radio broadcast that “this has got to stop”, and that if hopes of a peaceful settlement failed, Britain would range itself “unhesitatingly at the side of the United States”.

The meeting between Roosevelt and Konoe never took place, because Washington demanded Japanese concessions on China and Indochina first. On 6 September a conference held in the Emperor’s presence resolved to prepare for war with the United States, Britain and the Netherlands if negotiations had produced no result by early October. In October Konoe resigned, and General Hideki Tōjō became Prime Minister. The embargo was never lifted. On 8 December 1941, Asian time, Japanese troops landed in Malaya and entered Thailand, whose government agreed to let them pass after a few hours of fighting and on 21 December concluded an alliance with Japan. Within the same twenty-four hours carrier aircraft attacked Pearl Harbor, and at the turn of 1941 and 1942 the Japanese seized the oilfields of Borneo and Sumatra – which, at bottom, was what the whole game had been about since August 1941.