The China Mirage

by James Bradley

  None of the three cabinet members—present were Morgenthau, Stimson, and Knox, representing the Treasury, War, and Navy Departments—questioned these aggressive moves. Morgenthau later confided to his diary that Lothian’s idea left him with his “breath… taken away.”25 There was no one at the table to ask an elementary question: Would Dutch colonists in far-off Asia really blow up those oil wells when Adolf Hitler occupied their country and held their relatives hostage?

  Morgenthau presented Lothian’s plan to FDR in the Oval Office the next morning, July 19. The last time Morgenthau had tried to slip something by the State Department, he waited until Hull was on a ship bound for South America. This time Hull was again out of the country, at a conference in Havana.

  After Morgenthau outlined the idea to Roosevelt, the two men were joined by Stimson, Knox, and Undersecretary Sumner Welles, who would represent the State Department. Roosevelt presented Lothian’s idea without mentioning Morgenthau’s involvement. Stimson and Knox, of course, loved it. Welles was prepared to accept a limited aviation-gasoline embargo for domestic stockpiles but not this outrageous plan, which he thought would result in war with Japan. The debate dragged on for two hours.

  Roosevelt seemed intrigued by the idea of economic warfare, though he neither approved nor vetoed Morgenthau’s scheme. To directly oppose powerful cabinet members while he prepared for his third presidential campaign was not his style and would not have been politically wise. Welles stated his fierce objections, and the meeting ended inconclusively.

  Though FDR had seemingly agreed with Welles, Morgenthau was not finished. On Monday, July 22, Stimson informed Morgenthau that Japan was buying up all the aviation gasoline it could find in California. Morgenthau asked Stimson to forward this information to FDR, who had left for Hyde Park.

  Roosevelt apparently figured he could not tell the public that continued oil sales to Japan were his attempt to forestall a Japanese invasion of European colonies in Southeast Asia. But Roosevelt was facing an election; he announced that he would embargo Japan’s aviation gasoline. It seemed that Roosevelt was following what the China Lobby had convinced Americans was the correct policy: choking off Japan’s oil supply to stop American participation in Japanese aggression. But the fine print told a different story: The president intended to embargo only those aviation fuels with octane numbers of 87 and over. Setting the octane-number level at 87 was important because Japanese aircraft could run on 86-octane gasoline. (The more powerful American aircraft burned 100-octane gasoline, so the embargo would assure ample supplies at home.) Japan was still able to buy aviation fuel; in fact, it could buy more than before—which is exactly what it did. Roosevelt was playing an increasingly subtle and risky right hand/left hand game with Japan and the American people.

  As Welles’s draft of the aviation-fuel embargo wended its way through the bureaucracy, Morgenthau quietly asked a low-ranking Warrior to substitute the words petroleum products for aviation fuel. The secretly changed draft now stated that Roosevelt would cut off all oil sales to Japan. This altered legislation went to Hyde Park for FDR’s signature. Unaware of his friend’s scheming, Roosevelt signed it late on Thursday. The document then left Hyde Park and returned to Washington so the State Department could countersign it and affix the official seal.

  Sumner Welles reread the entire document, spotted the Morgenthau wording, and rewrote it so Japan could get all the below-87-octane gasoline it wanted. Bureaucratic routine and FDR’s ally at State had thwarted Morgenthau. At a press conference on Friday morning, July 26, Roosevelt said the U.S. was merely husbanding supplies and that rumors of an oil embargo against Japan were incorrect.

  Roosevelt had a cabinet meeting scheduled after the press conference, so by the time Morgenthau, Stimson, Knox, and Ickes met, they knew that Roosevelt would continue to appease the Japanese military with all the oil it wished to purchase. Roosevelt held firm in front of his cabinet, telling them that the United States would “not… shut off oil from Japan… and thereby force her into a military expedition against the Dutch East Indies.”26 As scholar Irvine Anderson wrote, “Nowhere in the available documentation is there evidence that Roosevelt seriously considered anything other than a check on excessive exports of high-octane aviation gasoline to Japan in the summer of 1940.”27

  Japan had invaded China in 1937 with the expectation that the fighting would last three months. It had been three years. The Japanese military, looking for excuses, pointed to a key supply route still open to Chiang: the French railroad from Haiphong, Indochina, to Kunming, China. Cut Chiang’s ocean link, and the war would be over, Japanese generals argued. Since France was in the hands of Germany, Japan’s ally, Japan asked the Vichy regime for “permission” to occupy northern Indochina. France “agreed.”

  At the September 25 cabinet meeting, the secretaries of treasury, war, Navy, and interior pummeled Hull in front of the president. They argued that the secretary of state’s policy of appeasement was not stopping Japan’s southern advance, so why was Hull continuing it? Morgenthau, Stimson, Knox, and Ickes were exasperated as Hull haltingly defended his position. In his deliberate Tennessee manner he said he would finally approve the twenty-five-million-dollar loan that Roosevelt had promised T. V. Soong in July. He also approved a scrap-iron embargo that amounted to only a slap on the Japanese wrist, as Hull would still allow Japan to buy most of the steel and oil it desired. Fumed Morgenthau, “My own opinion is that the time to put the pressure on Japan was before she went into Indochina and not after and I think it’s too late and I think the Japanese and the rest of the dictators are just going to laugh at us. The time to have done it was months ago and then maybe Japan would have stopped, looked and listened.”28

  Seeking friends in a hostile world, Japan’s foreign minister met with Adolf Hitler in Berlin and signed the Tripartite Pact uniting Japan, Italy, and Germany. The Tripartite Pact held that if an Allied nation attacked an Axis country, the other two Axis countries would enter the war against the Allies. The Japanese saw the Tripartite Pact as a way to dissuade the United States from attacking, but just as Roosevelt’s signals had not been understood in Tokyo, Japan’s intended message wasn’t grasped in Washington. By seeming to threaten the U.S. with a two-ocean war, Japan transformed itself in the American mind from a regional threat to a potential global extension of Hitler’s agenda.

  In the next two cabinet meetings—September 27 and October 4—Hull continued to serve as a punching bag for Secretaries Stimson, Morgenthau, Knox, and Ickes. In the first meeting, Frank Knox spoke for the group, demanding that Roosevelt stop the 87-octane sleight of hand and punish Japan by lowering the approved octane number to 67. Hull retorted that if the U.S. pinched off Japan’s aviation-fuel supply by lowering the octane level, the Japanese would be forced to go south for oil, and the United States might find itself involved in an unwanted war in Asia. U.S. Navy officers were focused on the Atlantic and did not want a war in the Pacific. Hull slapped Knox’s suggestion down as Roosevelt listened without comment. Secretary Ickes summed up the Warriors’ disgust:

  As usual, Hull did not want to do anything. He wouldn’t consent to an embargo on scrap until Japan had actually invaded Indochina and, as Henry [Morgenthau] and I agreed after [the] Cabinet meeting, he won’t agree to an embargo on gasoline until after Japan has taken the Dutch East Indies. How the President can put up with the State Department I do not understand. I do not doubt Hull’s sincerity but the fellow just can’t think straight and he is totally lacking in imagination. He makes no move until his hand is forced and then it is too late to be effective. If we had embargoed scrap and petroleum products two or three years ago, Japan would not be in the position that it is, and our position, relative to Japan, as well as that of England, would be infinitely stronger.29

  Stimson took the lead in pummeling Hull in the October 4 cabinet meeting. He began by distributing copies of an article from the August issue of Amerasia magazine entitled “A Bit of American History,” by Henry Dougl
as. Stimson had previously sent copies to Frankfurter, Morgenthau, and Knox, but not to Hull or Roosevelt. The First Wise Man also did not inform the president and cabinet that Amerasia’s publisher was a founding member of the Stimson Committee and that the author of the article under discussion had been paid by the China Lobby to write articles in favor of embargoing Japan.

  In the article, Douglas recalled an irrelevant 1918 incident in which the Japanese moved seventy-two thousand troops into Siberia and then withdrew them after the United States threatened to stop importing silk from Japan. As it happened, factors other than America’s trade threat—mostly domestic Japanese concerns about the huge military expense—caused Japan to withdraw its troops, but the article claimed that when a tough American president warns the little Japanese, Tokyo listens. Douglas, not surprisingly, advocated an aggressive approach to Asian affairs, as summarized by the First Wise Man:

  Japan has historically shown that she can misinterpret a pacifistic policy of the United States for weakness. She has also historically shown that when the United States indicates by clear language and bold actions that she intends to carry out a clear and affirmative policy in the Far East, Japan will yield to that policy even though it conflicts with her own Asiatic policy and conceived interests. For the United States now to indicate either by soft words or inconsistent actions that she has no such clear and definite policy toward the Far East will only encourage Japan to bolder action.30

  For an hour and a half Roosevelt’s cabinet had what Stimson called “a red hot debate on the Far East.” As before, the Warriors wanted to cut Japan’s oil supply, but Hull still held enough sway with Roosevelt and power in Congress to resist. Hull would agree only to small moves, like a vague tightening of the scrap embargo and Roosevelt’s suggestion that the fleet at Pearl Harbor be brought to full strength, hoping that these actions would be enough to warn Japan.

  Stimson had been checkmated by Hull again, but he had also succeeded in focusing an hour and a half of the president’s time on demands for FDR to get tough with Japan. In his diary entry about the meeting, the First Wise Man wrote, “On the whole it was one of the best debates I have heard.”31

  Roosevelt was riding herd on an increasingly large number of Washington Warriors who—like the American public—were calling for him to cut off Japan’s oil and steel. While many accused FDR and Hull of having no clear policy, they actually did: keeping the U.S. out of a Pacific war by appeasing Japan. Indeed, in spite of all the criticism, FDR was allowing Japan to buy more oil than ever.

  Roosevelt intended to warn Japan about further advancement into Southeast Asia with small hints like the transfer of the fleet to Pearl Harbor, a partial aviation-fuel embargo, the loan to Chiang, a scrap embargo, and the reinforcement of Pearl Harbor. Why he believed that these moves would be interpreted in the manner he intended by a people he knew little about, he didn’t explain. Instead of understanding FDR’s line in the sand, Japanese leaders felt the fearful tightening of the ABCD encirclement, the American-British-Chinese-Dutch mob choking Japan.

  On September 30, Japanese planes bombed the city of Kunming, China, for the first time, marking an expansion of the fighting. Japanese navy pilots flew out of their newly acquired airport near Hanoi that until recently had been controlled by the French. In the Japanese planes’ bellies was U.S. gasoline. The bombs that fell on the Noble Chinese Peasants were made from U.S. steel.

  Roosevelt’s 1940 Republican challenger for the presidency was Wendell Willkie, a corporate attorney who had never been elected to public office. With the majority of the American electorate isolationist, Willkie had gained in the polls by repeatedly portraying FDR as a warmonger, going so far as to declare, “You may expect war by April, 1941, if [Roosevelt] is elected.”32 FDR’s close personal aide Harry Hopkins fretted, “This fellow Willkie is about to beat the Boss.”33

  In October, as the president and his speechwriter Robert Sherwood rode north on the campaign train through New England, FDR received telegrams from Democratic leaders pleading with Roosevelt to assure the country he would keep America out of the war. Roosevelt exploded to Sherwood, “It’s in the Democratic platform and I’ve repeated it a hundred times.” Sherwood responded, “I know it, Mr. President, but they don’t seem to have heard you the first time.”34 In a major speech in the Boston Garden, Roosevelt said, “And while I am talking to you mothers and fathers, I give you one more assurance. I have said before, but I shall say it again and again and again: Your sons are not going to be sent into any foreign wars.”35

  Roosevelt and Willkie did agree about China: the Middle Kingdom would be changed by outside forces, and if Americans helped him, Chiang would push back Japan, and China would emerge as America’s best Asian friend. It was a feeling in Yankee hearts from the time of the merchants and missionaries. As Willkie put it, Chiang Kai-shek was a great man whose struggle against Japan was “one of the decisive battles in mankind’s long fight for freedom and for a better life.” There was no doubt in Willkie’s mind that America’s “best ends will be served by a free, strong, and democratically progressive China, and we should render China economic assistance to that end.”36

  On election night, November 5, 1940, Warren Delano’s grandson was in Sara Delano Roosevelt’s home when he learned that he had won an unprecedented third term by a large margin. The voter turnout was huge—62.5 percent of the electorate—and Roosevelt captured 55 percent of the popular vote and 449 votes in the Electoral College to Willkie’s 82.

  At a postelection November cabinet meeting. Roosevelt emphatically repeated his dictum that the best policy to keep peace in the Pacific was to continue to supply Japan with oil. A Treasury Department summary recalled that Roosevelt “announced definitely that if we went further in our embargo there was danger that Japan would go out on her own against the Far Eastern possessions of England and Holland, particularly the latter. Apparently this is to be our policy until the Japanese, by some overt act, cause us to change.”37

  Eleanor Roosevelt—honorary chairwoman of the China Emergency Relief Committee and a friend of Mr. and Mrs. T. V. Soong’s—pestered her husband about why he didn’t follow the China Lobby line and just cut off Japan’s oil. FDR replied that it would be “an encouragement to the spread of war in the Far East… if we forbid oil shipments to Japan, Japan… may be driven by actual necessity to a descent on the Dutch East Indies.”38

  T. V. Soong had previously asked President Roosevelt for hundreds of millions of dollars only to get the quick twenty-five million promised in July over an Oval Office sandwich. Now, postelection, Roosevelt looked for a chance to up U.S. backing of T.V.’s brother-in-law. On November 28, Tokyo announced that it would recognize a puppet regime in Japanese-controlled Nanking as the legitimate government of China. After fleeing Nanking, Chiang ceded land for time and established a new inland capital over the mountains in Chungking, a city in Sichuan Province. Roosevelt (“in strictest confidence”) instructed Secretary of the Treasury Morgenthau and Warren Lee Pierson, president of the Export-Import Bank, to give Chiang a one-hundred-million-dollar loan in two fifty-million-dollar chunks within twenty-four hours.39 Roosevelt said the U.S. had to “do something fast” to save “free China.” “It is a matter of life and death… if I don’t do it… it may mean war in the Far East.”40

  Two poker-playing buddies of T. V. Soong’s would dispense the money in two equal chunks: fifty million from Morgenthau and fifty million from Pierson. The U.S. would pay the money to the Bank of China—controlled by Ailing—with T. V. Soong “guaranteeing” the loan. The hundred million dollars in “aid to China” would flow through T. V. Soong’s hands to Ailing and on to Chiang.

  These massive loans, like the blowout credit in 1938 offered while Secretary Hull was at sea, were down payments on America’s long future slog in Asia. Franklin Roosevelt engineered these commitments in Asia in the same style as Theodore Roosevelt had: in secret, with little knowledge of reality in Asia and at the direction of a buddy fro
m Harvard whispering in his ear. A young administration official later summed up T.V.’s coup:

  Think of it! A Chinaman comes flying into Washington. He takes a room in a hotel, he talks to a couple of people, he tells a story and sticks to it. And, first thing you know, that Chinaman walks off with a hundred million dollars in his pocket. A hundred million dollars! Just think of it.41

  Life magazine claimed that just the “announcement that the $100,000,000 loan had been approved by Congress on Dec. 2 1940, hit China like 100,000,000 volts of electricity.” Life further reassured readers that “for $100,000,000 China promised to keep 1,125,000 Japanese troops pinned in the field; to keep Japan’s formidable fleet from blockading the China shore; to retard the aggressors’ march in the direction of immediate U.S. interests. The merchandise was fantastically cheap at the price.”42

  As usual, the mirage in Washington was the opposite of the reality in China. Chiang had no intention of escalating his battle against the Japanese. Eliminating Japan was to be the job of Chiang’s new barbarian, Franklin Roosevelt, whom T.V. was now asking for airplanes. Americans believed that Southern Methodist Chiang was leading the Noble Peasants in a valiant war against the mad-dog Japanese, but the Four Hundred Million were becoming disgusted by Chiang’s nonresistance to the Japanese barbarians and his policy of having Chinese kill Chinese.

  Since the Shanghai fighting, Chiang had rested on his China Lobby propaganda laurels, and his rule became even more confused and decadent. He was a dismal administrator, an anal-retentive executive who could not delegate authority. Chiang held over eighty titles, from chief of the government to president of the Boy Scouts. Historian Michael Gibson did a detailed study of Chiang’s forces and concluded that “by the end of 1938, the Central Army had all but ceased to exist as an effective fighting force.”43 Many of Chiang’s officers couldn’t read maps; only 25 percent of junior officers had received an education. Chiang’s regional commanders were on-and-off allies, sometimes with him, sometimes not. The foot soldiers had little to fight for; they were Chiang’s kidnapped victims. An indication of the scale of deaths and desertions among Chiang’s armies is that he had ordered the conscription (kidnapping) of one and a half million men annually from 1938, yet overall strength remained steady at four million men. Chiang’s surviving soldiers were serving time in a kind of hell, and they took it out on the peasants.