In May of 1941 Roosevelt established the Office of Petroleum Coordinator for National Defense, headed by Secretary of the Interior Harold Ickes. Ickes was knowledgeable about domestic energy, but he had no foreign-policy experience. Like Morgenthau had, Ickes complained that the secretary of state was a softy:
All that [Hull] ever tried to do in addition to his futile protests at continued encroachments by the dictators, was to negotiate reciprocal trade agreements. These were all right so far as they went; they might have led to something in ordinary times when peace was the principal preoccupation of the nations of the world, but as I remarked to the President on one occasion, with the world in a turmoil they were like hunting an elephant in the jungle with a fly swatter.35
Ickes searched for a way to cut Japan’s oil, publicly (and incorrectly) blaming Japan’s purchases of oil on the West Coast for a gas shortage on the East Coast. Hull complained to Roosevelt. FDR scolded Ickes, telling him that oil exportation to Japan was a sensitive issue, “so much a part of our current foreign policy that this policy must not be affected in any shape, manner or form by anyone except the Secretary of State or the President.”36
Roosevelt and Hull wanted the Japanese to have all the California oil they desired. A growing team of Warriors was trying to shut off the oil spigot, but as long as the president and his secretary of state remained vigilant, the U.S. would not be drawn into an unwanted war in Asia.
June of 1941 saw secret turmoil in the lives of the president and the State Department’s two top officials.
Undersecretary of State Sumner Welles was accused of making homosexual advances to black Pullman porters on the presidential train. While some warned FDR that Welles was a criminal who should be fired, Roosevelt stuck by Welles.
At 9:30 p.m. on June 21, a U.S. Navy ambulance arrived at the White House, and medics carried Missy LeHand out on a stretcher. Missy had been at FDR’s side as his secretary and companion since the early 1920s; she had arranged the president’s days and enlivened his nights. Her bedroom was above FDR’s in the White House. Wrote historian Doris Kearns Goodwin, “Missy was in love with her boss and regarded herself as the other wife.”37 Presidential speechwriter Raymond Moley said about FDR’s affection for her: “There’s no doubt that Missy was as close to being a wife as he ever had—or could have.”38
Missy had suffered a stroke, leaving the president for the first time in decades without her organizational skills and affection.
Hours after the person who had been closest to FDR left him, Germany invaded Communist Russia. Something momentous had just taken place on the world stage, but Secretary of State Hull was on his way to White Springs, West Virginia, for an extended vacation. Hull was sick, tired, and probably frustrated that the president hardly seemed to need him; FDR was outsourcing many of his diplomatic moves through Harry Hopkins. Hull would be gone for six weeks at a time when the president was recovering from a tragic personal and professional loss, and a besieged Sumner Welles ran the State Department.
While FDR and Tommy the Cork could keep their Asian air-war scheme a secret from the American public, the enemy was not fooled.
After the first contingent of FDR’s mercenaries sailed to Rangoon, Burma, aboard the President Pierce, Japanese intelligence informed their offices in Nanking, Shanghai, Beijing, and Canton:
The first party of 100 members of American aviators and technicians dispatched recently has arrived in Rangoon… it is expected that large numbers will be sent out from the United States… Chungking requested that the United States supply some 500 first-class airplanes, and as a result of the contacts made by T. V. Soong… for the time being, a mere 80 planes had been supplied.39
In early July, about ten “retired” U.S. Army Air Corps pilots and a hundred and fifty mechanics quietly checked into San Francisco’s swanky Mark Hopkins Hotel. Their U.S. passports identified them as ordinary missionaries, clerks, bankers, teachers, and students. Farmer Claire Chennault joined them on July 7 for a night of partying. The next day Chennault boarded a Pan American clipper, and two days later—escorted by American naval vessels—FDR’s second contingent of mercenaries sailed out of San Francisco Bay aboard the Dutch freighter Jagersfontein.
Chennault later admitted that after the Jagersfontein pulled out of San Francisco Bay, his men heard a Japanese radio broadcast boast, “That ship will never reach China. It will be sunk.”40
At a meeting in Emperor Hirohito’s presence on July 2, Japanese leaders decided to go south beyond China toward the rich resources of Southeast Asia. Because U.S. code breakers had decrypted Japanese diplomatic communications, Roosevelt and a few others were aware that Japan intended to occupy the southern half of Indochina and use it as a staging area—a serious challenge to the ABCD powers because Japan could place bombers within range of their Philippines, Malaysian, and Dutch East Indies colonies.
Roosevelt had earlier frozen German and Italian funds deposited in the United States. The freeze process existed, and Japan could be added with a stroke of FDR’s pen. Welles now suggested that FDR freeze Japanese assets. Roosevelt took no action.
Roosevelt continued to spend much more time focused on Europe than Asia. Working around his State Department, FDR sent Harry Hopkins to England to meet with Winston Churchill and arrange a secret meeting between the two leaders in Canada. Via Hopkins, Roosevelt briefed Churchill on his strategy of keeping peace in the Pacific. Roosevelt wanted the U.S. and Japan to agree to “neutralize” Indochina, turning the area into a neutral zone from which both Japan and the U.S. would acquire resources. But first Japan would have to withdraw from Indochina.
On July 18, Roosevelt informed his cabinet that a reliable source (his code breakers) thought that Japan would occupy southern Indochina within three or four days. Roosevelt said that the U.S. should do little, especially not embargo oil, since “to cut off oil altogether at this time would probably precipitate an outbreak of war in the Pacific and endanger British communications with Australia and New Zealand.”41
Roosevelt instructed Welles to draft regulations for a freeze of Japanese assets, but he had not decided whether to implement it. Edward Miller wrote,
Welles was an unusual choice because financial sanctions… were the province of Morgenthau’s Treasury Department. Perhaps Roosevelt thought an official of the softer State Department would carry out his policy of a partial freeze more reliably than the pugnacious Morgenthau.42
Welles sketched out a freeze of Japanese assets in the U.S., giving Roosevelt a leash to control Japanese purchases. If FDR froze their holdings, the Japanese would have to ask his permission when they wanted to use their funds, and Roosevelt could veto their choices. Welles knew that FDR wanted Japan to continue to get U.S. oil and he designed a system that would release sufficient funds for Japan to purchase plenty of oil from California. Welles outlined the plan on Saturday, July 19, and asked Dean Acheson to draft the details.
Acheson thought it was insane and immoral for FDR to continue selling Japan oil. Like the First Wise Man, Acheson believed America had a share in Japan’s war guilt. Acheson ignored Welles’s orders and drafted a tough, sweeping embargo against Japan. Later Welles deleted Acheson’s more aggressive wording and redrafted the document himself. (Acheson’s attempt to radically alter Welles’s draft was insubordinate, but in the loosey-goosey Roosevelt administration, Acheson kept his job, just as Morgenthau had remained after he had tried to cut Japan’s oil by altering Welles’s July 1940 draft.)
On July 23, Roosevelt approved the American Military Mission to China (AMMISCA), a grandly named but relatively small group of Army officers who were to study Chiang’s Lend-Lease needs. Roosevelt also approved 269 additional fighters and 66 bombers for the Chiang-Chennault scheme. These moves were groundbreaking: for the first time, FDR established an official U.S. military connection with Chiang. And bombers were offensive weapons, which the Japanese spies watching the Rangoon docks would surely note to Tokyo.
FDR defended his oil
sales to Japan in public for the first time in a speech he gave at Hyde Park to the Volunteer Participation Committee, a group dedicated to informing their fellow Americans of fast-changing world events. In a folksy manner, FDR explained,
Here on the East Coast you have been reading that the Secretary of the Interior, as Oil Administrator, is faced with the problem of not enough gasoline to go around in the East Coast, and how he is asking everybody to curtail their consumption of gasoline. All right. Now I am—I might be called—an American citizen, living in Hyde Park, N.Y. And I say, “That’s a funny thing. Why am I asked to curtail my consumption of gasoline when I read in the papers that thousands of tons of gasoline are going out from Los Angeles—the west coast—to Japan; and we are helping Japan in what looks like an act of aggression?”
All right. Now the answer is a very simple one. There is a world war going on, and has been for some time—nearly two years. One of our efforts, from the very beginning, was to prevent the spread of that world war in certain areas where it hadn’t started. One of those areas is a place called the Pacific Ocean—one of the largest areas of the earth. There happened to be a place in the South Pacific where we had to get a lot of things—rubber, tin, and so forth and so on—down in the Dutch Indies, the Straits Settlements, and Indochina. And we had to help get the Australian surplus of meat and wheat, and corn, for England.
It was very essential, from our own selfish point of view of defense, to prevent a war from starting in the South Pacific. So our foreign policy was trying to stop a war from breaking out down there.…
All right. And now here is a nation called Japan. Whether they had at that time aggressive purposes to enlarge their empire southward, they didn’t have any oil of their own up in the north. Now, if we cut the oil off, they probably would have gone down to the Dutch East Indies a year ago, and you would have had war.
Therefore, there was—you might call—a method in letting this oil go to Japan, with the hope—and it has worked for two years—of keeping war out of the South Pacific for our own good, for the good of the defense of Great Britain, and the freedom of the seas.
You people can help to enlighten the average citizen who wouldn’t hear of that, or doesn’t read the papers carefully, or listen to the radio carefully, to understand what some of these apparent anomalies mean.43
Roosevelt had for the first time publicly revealed that he was appeasing Japan with oil in the hopes of garnering domestic support for his Pacific peace policy. He had clearly signaled that continuing oil sales to Japan was his way of keeping the U.S. out of an unwanted Pacific war. But his American audience had been so bamboozled by constant China Lobby propaganda that they couldn’t fathom why FDR would be concerned about Japanese retribution. Liberal journalist I. F. Stone complained in the Nation magazine,
The President committed a historic blunder when he [admitted that] we had to sell oil to Japan to keep it from seizing the Dutch East Indies. This translates bitterly into Chinese, for it says that we were content to fuel the bombers that mangled China’s children as long as Japan kept out of the rich imperialist preserves in the Indies.… We have been supplying two-thirds of Japan’s oil.… There is no way of knowing what has happened to our exports to Japan since March. Neither State Department nor Export Control has ever given out the details… a nation-wide fight must be organized against this most vicious kind of secret diplomacy.44
On Saturday, July 26, FDR issued Executive Order No. 8832, which froze all assets owned 25 percent or more by Japanese interests.45 Now all Japanese transactions in the U.S. were under FDR’s control. While this action made him appear to be getting tough, Roosevelt intended to release plenty of frozen dollars so Japan could purchase the items it needed to fuel its military, especially oil. FDR hoped that the freeze would mollify the China Lobby, calm an aroused American public, and shock Tokyo but not lead to war. As Roosevelt told Harold Ickes, he planned to use the freeze order as a “noose around Japan’s neck,” and he would “give it a jerk now and then.”46
Treasury agents now oversaw Japanese banks in the United States. The Japanese in the U.S. got busy filling out Treasury forms to release their frozen dollars.
Roosevelt’s actions were understood by many on the inside. Admiral Harold Stark, chief of naval operations, assured his commanders that FDR’s financial freeze didn’t mean an oil embargo against Japan. He wrote, “Export licenses will be granted for certain grades of petroleum products.”47
Thus, with his right hand, Roosevelt showed his domestic audience that he was cracking down on Japan. With his left, FDR intended to approve Japan’s buying enough oil to keep peace in the Pacific. But at this moment, the president was focused on events across the Atlantic. And even Warren Delano’s grandson had only two hands.
Late Friday, July 25, Roosevelt received a cable from Harry Hopkins in England:
I am wondering whether you would think it important and useful for me to go to Moscow. Air transportation good and can reach there in twenty-four hours.… If Stalin could in any way be influenced at a critical time I think it would be worth doing by a direct communication from you through a personal envoy. I think the stakes are so great that it should be done. Stalin would then know in an unmistakable way that we mean business on a long-term supply job.48
FDR knew very little about what had happened in Russia since the German invasion; foreigners in Moscow were completely in the dark regarding Stalin’s plans. Roosevelt, eager to supply Stalin with military equipment to slow Hitler, responded immediately, “Welles and I highly approve Moscow trip.… I will send you tonight a message for Stalin.”49
Roosevelt spent a long weekend at Hyde Park and then returned to Washington on Monday, July 28, prepared to focus on aid to Communist Russia. He was disappointed to find that most of the Soviet requests for military equipment that he’d thought were moving through the system were in fact stalled in Stimson’s War Department. Morgenthau expressed FDR’s sense of urgency that the Russians “have just got to get this stuff and get it fast… we will never have a better chance… somebody has been looking over this country and the good Lord has been with us, but we can’t count on the good Lord and just plain dumb luck forever.”50
To administer his freeze on Japanese assets, Roosevelt created a nuanced interdepartmental process. First, the State Department would decide how much oil Japan could purchase, continuing FDR and Hull’s exclusive control of America’s oil spigot. State’s decision would move to Treasury, which would calculate how many Japanese-owned dollars had to be unfrozen to meet State’s dictate. Then the Foreign Funds Control Committee (FFCC), a newly created three-man panel, would release the Treasury-approved dollars for the Japanese to use to purchase their State-approved oil. The FFCC wasn’t involved in policy-making; it existed only as a mechanism to release to the Japanese the dollars State had authorized and Treasury had calculated. Little did Roosevelt imagine that an obscure committee deep within his bureaucracy would catapult America into World War II.
The FFCC was made up of three representatives, one each from the Departments of State, Treasury, and Justice. Since it was designed to have no important decision-making function, there was no need for the secretaries of each department to serve on the committee, so they appointed surrogates: Dean Acheson from State, Edward Foley from Treasury, and Francis Shea from Justice. Acheson stood head and shoulders above Foley and Shea in prestige, education, experience, chutzpah, and age (forty-eight for him, versus thirty-five for Foley and thirty-six for Shea). Neither Foley nor Shea had much exposure to foreign affairs, whereas Acheson was an officer in the esteemed diplomatic branch.
After listening to FDR’s Hyde Park speech about appeasing Japan with oil to prevent war, Acheson sniffed that “the Foreign Funds Committee was not enlightened on administering the President’s policy of no policy.”51
Harry Hopkins met Joseph Stalin on Wednesday, July 30, in Stalin’s enormous Kremlin office. Hopkins told the sixty-two-year-old Communist leader, “The Pr
esident considered Hitler the enemy of mankind and… he therefore wished to aid the Soviet Union in its fight against Germany” and consequently Roosevelt was determined “to extend all possible aid to the Soviet Union at the earliest possible time.”52
On Thursday, July 31, 1941, Roosevelt met with a Soviet military delegation. Communists were in the White House.
American and Japanese newspapers were full of stories guessing what the U.S. freeze would mean to Japan. The British ambassador wrote that FDR’s policy on oil shipments was to “keep the Japanese in a state of uncertainty.”53 FDR was confident that once the Japanese learned they would get all the oil they desired, just under new rules, there would be no war in the Pacific.
Roosevelt was focused on Europe. His closest adviser, Hopkins, was in Moscow, and FDR and Churchill were excited about their coming secret rendezvous. At an August 1 cabinet meeting, Roosevelt once more demanded that aid to Communist Russia get moving. Ickes recalled FDR giving Stimson “one of the most complete dressings down that I have witnessed for giving Russia the ‘run-around.’ ”54 Roosevelt said he was “sick and tired of promises” and ordered Stimson to “get the planes right off with a bang next week!”55 A fuming Stimson, whom few had criticized so harshly, complained later to his diary that Roosevelt “was really in a hoity-toity humor and wouldn’t listen to argument.”56
That same day the State Department notified the FFCC that it had approved hundreds of thousands of dollars of oil for Japan. The still vacationing Hull spoke to Welles by phone the next day, August 2. Both men were relieved that Japan would get oil, thus keeping peace in the Pacific.
The White House told the press a cover story that Roosevelt was going on a ten-day fishing trip off the coast of Maine aboard the presidential yacht Potomac. On Sunday, August 3, FDR arrived by train at New London, Connecticut, where he transferred to his yacht. In Scotland, his counterpart Winston Churchill boarded the Prince of Wales for his five-day trip across the Atlantic.
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