The China Mirage

by James Bradley

  On Monday, August 4, the Potomac sailed into Nonquitt, Massachusetts, where Roosevelt picked up a group of exiled Norwegian royals for a day of fishing. Hundreds of people ashore saw the president. That evening, many watched as the Potomac sailed away with the presidential flag flying and a small party visible on deck, including the figure of the president sitting in a chair. It wasn’t Roosevelt, but a double. The Secret Service had covertly transferred Roosevelt to the battleship USS Augusta, which proceeded secretly to Canada.

  Roosevelt had left Washington believing that his loose noose around Japan would on the one hand satisfy domestic American opinion and on the other allow Japan enough purchases to prevent a war in Asia. For a year, since July of 1940, FDR had gotten the better of Stimson, Morgenthau, Knox, and Ickes on the oil issue. Twice—once with Morgenthau in July 1940 and again just recently with Acheson—Welles had caught Warriors changing official language in order to cut Japan’s oil. Now Roosevelt was incommunicado out at sea, Hull was worn down and in transit from his West Virginia vacation, and the embattled Welles was flying north to rendezvous with Roosevelt. The cats were distracted and away from Washington. The mice decided to play.

  At the August 5 meeting of the FFCC, Acheson, Foley, and Shea reviewed the flow of oil to Japan and were aghast. As Jonathan Utley explains, “When they saw how much oil Japan would be able to buy under the freeze guidelines, they agreed not to release funds to Japan for the purchase of items for which [Japan had been] issued licenses.”57 Waldo Heinrichs noted, “The decision on an oil embargo was closely held and deviously managed. Action proceeded not in the formal realm of peacetime quotas and proclamations restricting export, for on paper Japan was supposed to receive some quantities of some kinds of oil, but in the shadowy world of inaction, circumvention, and red tape.”58

  To confront Japan’s State-approved and Treasury-calculated requests with a definitive no would have attracted FDR’s attention. As Acheson later explained to a British associate, he had “discovered by accident the technique of imposing a total embargo by way of its freezing order without having to take decisions about quotas for particular commodities.”59 Acheson and Morgenthau passed the buck back and forth to each other, running the Japanese through a bureaucratic maze. A Treasury official later wrote, “The Japanese tried every conceivable way of getting the precious crude oil, but to each proposal the [FFCC] had an evasive answer ready to camouflage its flat refusal.”60

  Acheson had just secretly changed Roosevelt’s Asian policy and done the specific thing the president feared would lead to war. As Utley wrote, “Roosevelt intended the freeze… to bring Japan to its senses, not to its knees.”61 History well notes the insanity of Japan’s attack on Pearl Harbor but little notes the inanity of the so-called Wise Men—focused on the China Lobby mirage—who provoked it.

  In early August of 1941 two Japanese oil tankers docked at the port of San Pedro, California. Japanese officials had sought and received approval from the State Department for the oil months earlier, and the Treasury Department had determined the amount of dollars required. Japan expected that its tankers would be filled as soon as the FFCC released its funds.

  Hull had returned to the State Department on August 4 but did not realize that Acheson, aided by Morgenthau, had essentially imposed a complete embargo by refusing to release funds to Japan. Hull was still exhausted; he had been absent for six weeks and had a backlog of work. Indeed, from Hull’s vantage point, the system seemed to be functioning as planned. On August 11, an unaware Hull approved three more Japanese licenses to purchase California oil. Two Japanese embassy officials immediately applied to the FFCC for release of their frozen dollars.

  For the past eight months Morgenthau had monitored Japanese transfers from American banks to Brazilian banks. Creating another bureaucratic tar pit, Acheson arbitrarily told the Japanese embassy that their State-approved oil should be paid for from their “free funds” in Brazil rather than from their frozen accounts in the United States. Japanese embassy officials complained that private companies were purchasing the oil while the cash in Brazil belonged to the Japanese navy. Acheson suggested that they try harder to bring the funds from Brazil.

  Throughout August, the Japanese met repeatedly with U.S. officials to get their State Department–approved oil. Cleverly, Morgenthau and Acheson never outright refused the Japanese requests, but there was always some small nit to be picked, an unexpected twist or turn to be negotiated. If they did bring dollars up from their South American accounts, Japanese officials asked, would the U.S. promise to let them use those dollars to buy oil? Acheson responded that the question was hypothetical; Japan should transfer the dollars, and then Acheson would decide. The Japanese finally agreed to try Brazil. Acheson then told his Japanese counterparts that the U.S. would accept their “free funds” from Brazil only if Japan identified the sources and locations of all its South American accounts. Often, Japanese officials found their phone calls unreturned, and they were told that “many State Department high officials were absent in those hot summer days.”62

  For the entire month of August, Tokyo officials waited as tankers sat empty in San Pedro. They would have to either persuade FDR to reopen his California oil spigot or advance militarily south and seize oil in the Dutch East Indies. Utley noted, “The policy that was supposed to avoid provoking Japan was transformed into full-scale economic warfare that led to the attack four months later on Pearl Harbor.”63

  Japan was solvent and had plenty of liquid assets to pay for its oil—dollars as well as gold and silver bars in both the U.S. and Japan. Yet Roosevelt had effectively made Japan illiquid. Now Japan was dependent on FDR’s rules and regulations. As despair mounted in Tokyo, Hull was focused on the aftermath of his talks with the befuddled Nomura, continuing to question and criticize Japan’s terms. Hull thought he was negotiating, but Tokyo believed he was backpedaling from his initial offer in the American plan. Like the Foreign Funds Control Committee, Hull kept asking Japanese diplomats for more information without signaling progress. Many Japanese leaders sensed in Washington’s delay tactics the tightening of the ABCD encirclement.

  Dean Acheson was not the first to attempt to cut Japan’s oil supply. Morgenthau, Ickes, and a number of Washington Warriors within Roosevelt’s helter-skelter administration had all given it a try. In each of those cases, however, Hull, Welles, or Roosevelt had become aware of what was going on and intervened before any serious damage could be done. The only thing that was different about Acheson’s successful exploit was that—supported by Morgenthau, Stimson, and Ickes—he got away with it.

  Acheson later defended his insubordination by writing that “no rational Japanese could believe that an attack on us could result in anything but disaster for his country.”64 Acheson—like most Americans—was saturated in China Lobby propaganda and he assumed that the Japanese would react just as the First Wise Man predicted. The legendary English military historian Sir Basil Henry Liddell Hart later explained what the Wise Men had missed: “No Government, least of all the Japanese, could be expected to swallow such humiliating conditions, and utter loss of face.”65 As Roland Worth asks in No Choice but War, “If the United States would have launched a preemptive war under such circumstances, why is it so surprising that the Japanese did so?”66

  Chapter 10

  ASLEEP AT THE WHEEL

  The Pacific War was a war that need not have been fought.

  —John Toland1

  Roosevelt’s flotilla arrived at Placentia Bay on the coast of Newfoundland early on Thursday, August 7. Soon the bay was full of American warships and the sky crisscrossed with patrolling warplanes. Roosevelt was delighted that he would fool the press about his whereabouts for over one week, not realizing that back in Washington some Warriors were proud of another deception.

  FDR had his friend Sumner Welles at his side when he met with Churchill. Roosevelt also brought along General George Marshall, Admiral Harold Stark, Major General Hap Arnold, and Admiral Ernest
King. The commander in chief invited his military heads to work with him directly; his secretaries of state, war, and the Navy would be informed later.

  Roosevelt, Churchill, and their military chiefs discussed war in Europe at the same moment Dean Acheson was starting one in Asia. In a foggy Atlantic bay, the Europe-first deliberations focused on Gibraltar, West Africa, Iceland, the Faroe Islands, North Atlantic escort operations, the bomber ferry route, Vladivostok, the Persian Gulf–Iranian route, the Arctic passage, stabilization of the front in the Soviet Union, and the Iberian Peninsula. No one imagined that the American military’s first assignment in World War II would be fighting the Japanese on Guadalcanal, a faraway Pacific island not discussed at the Atlantic Conference.

  Since the dawn of the oil age, America had provided Japan with the lifeblood of its military-industrial society, and now Tokyo saw that pipeline abruptly going dry, leaving Japan an industrialized beached whale. Acheson’s oil embargo set the war clock ticking in Tokyo. Distinguished historian Akira Iriye wrote,

  The oil embargo had a tremendous psychological impact upon the Japanese. The ambivalence and ambiguities in their perception of world events disappeared, replaced by a sense of clear-cut alternatives. Hitherto they had not confronted the stark choice between war and peace as an immediate prospect and had lived in a climate of uncertainty from day to day. Now, with the United States resorting to decisive measures, that phase passed. Any wishful thinking that America would tolerate the invasion of southern Indochina was dissipated; either Japan would stay in Southeast Asia at the risk of war with the Anglo-American countries or it would retreat to conciliate them. The military judged that it was too late for conciliation; Japan would now have to consider the likelihood of war, with the United States as its major adversary.2

  Neither Tokyo nor Washington wanted to fight each other in August of 1941. No Japanese leader ever proposed an invasion of the United States. Admiral Isoroku Yamamoto lamented that to “fight the United States is like fighting the whole world… Tokyo will be burnt to the ground three times.”3

  On the American side, neither Roosevelt, Hull, Stimson, Morgenthau, the Hotdogs, the Washington Warriors, nor the U.S. military wanted war with Japan. The U.S. Navy at that point had no up-to-date military maps of the Solomon Islands, where the U.S. Marines would later fight America’s first battle of World War II. Indeed, Stimson, Morgenthau, Ickes, and Acheson—all upholders of the China Lobby mirage—believed that their subversion of FDR’s Asia policy could result only in peace; the mad-dog military in Japan would be humiliated, and democracy would bloom. In Fateful Choices, Ian Kershaw points out what the Wise Men missed:

  For no faction of the Japanese elites could there be a retreat from the goals of a victorious settlement in China and successful expansion to establish… Japanese domination of the Far East. These objectives had not just become an economic imperative. They reflected honor and national pride, the prestige and standing of a great power. The alternatives were seen as not just poverty, but defeat, humiliation, ignominy, and an end to great power status in permanent subordination to the United States.4

  Emperor Hirohito was much more troubled about battling America than his grandfather Meiji had been about taking on the Russian bear. But it was a matter of life or death for the empire; with no oil, there would be no Japan. After the California oil pump was cut off, Japan felt forced to thrust south to the Dutch East Indies, as Roosevelt and Hull had predicted. Japan’s leaders leaped off the war cliff, hoping that by disabling the American fleet at Pearl Harbor, they would keep the U.S. from interfering with its advance into Southeast Asia.

  Roosevelt and Churchill enjoyed each other’s company. Churchill would have been pleased if Roosevelt had committed the U.S. to fighting Hitler, but FDR was cautious, not wanting to get out in front of Congress and American public opinion. Roosevelt’s aim was to establish a political rationale for any coming war. In what was later called the Atlantic Charter, Roosevelt and Churchill agreed that their own countries would not seek territorial gains, that changes in borders should not be made without the consent of the peoples concerned, and that all people had the right to self-determination.

  In Japanese eyes, the document was blatantly hypocritical. At the moment that Churchill agreed that everyone had the right to self-determination, Britain held hundreds of millions of Asians and Africans in colonial bondage, from Hong Kong to India to Kenya.

  As the Japanese tankers sat empty off San Pedro, Roosevelt—unaware that Morgenthau, his best friend, was helping Acheson cut Japan’s oil—attended Sunday church services hosted by Churchill on the Prince of Wales. The leaders and their entourages sang “Onward, Christian Soldiers.”

  Over the next two days Churchill asked Roosevelt to warn Japan that if it made any more aggressive moves, it would mean war with the Anglo-Americans. Roosevelt was noncommittal.

  Sunday church services aboard the HMS Prince of Wales, where Franklin Delano Roosevelt and Winston Churchill sang “Onward, Christian Soldiers,” August 10, 1941. For one whole month Roosevelt would not know that his administration had cut Japan’s oil supply. (CSU / Everett Collection)

  Roosevelt left Placentia Bay on August 12, sailed into American waters, transferred back to the Potomac in Blue Hill Bay, Maine, and actually did some fishing. The Potomac docked at Rockland, Maine, the afternoon of August 16. Reporters came aboard and Roosevelt spoke eloquently about his agreements with Churchill and movingly about their joint church service. Later FDR and Hopkins were driven past large crowds to the train station, where they boarded the presidential train for Washington.

  For years, the president of the United States had been clear and consistent in stating that the one action that would precipitate a war in the Pacific would be a U.S. embargo of Japan’s oil. Dean Acheson had decided to cut off Japan’s oil almost two weeks earlier, yet, incredibly, Roosevelt, Hull, and other top policy makers still had no idea what had happened. Returning to Washington, Sumner Welles asked Acheson to brief him on important events. Acheson reported that Hull had granted Japan oil-export licenses but neglected to mention that he and Morgenthau had thrown a wrench in the works.

  Roosevelt met with Ambassador Nomura a few hours after his return to Washington on August 17. While Churchill had goaded FDR to get tough, the president’s soft handling of Nomura shows that he wanted to avoid confrontation with Japan. Instead of giving Nomura a strong warning that continued Japanese aggression would mean war, as Churchill had requested, Roosevelt read him a State Department document that stated vaguely that the U.S. would take undefined steps if Japan advanced farther.

  Roosevelt was still unaware that Tokyo believed he and his administration were squeezing Japan’s oil supply. Indeed, most top officials were in the dark concerning Acheson’s scheme. On August 20, Vice President Henry Wallace chaired a meeting of the Economic Defense Board with Acheson in attendance representing State. Wallace complained that the administration was still allowing oil shipments to Japan and suggested that they be cut off. It had been over two weeks since Acheson had decided to do just that, but he told Wallace that FDR and Hull were “working on this question and… it would prove embarrassing if the Economic Defense Board went into the matter.”5

  On August 28—three weeks after his underlings’ subversion—Roosevelt still assumed that oil was flowing, referring in a White House meeting to “the oil quota allowed Japan.”6 The State Department went on granting Japan licenses for oil, and Japan had plenty of funds, but Morgenthau and Acheson continued to ping-pong Japanese diplomats from one inconclusive meeting to the other.

  By September 4, no oil had left the U.S. bound for Japan for a month. In a meeting that day, Nomura suggested to Hull that both the U.S. and Japan should “permit export to the other of commodities in amounts up to the figures of usual or pre-war trade.”7 Hull was confused, as he thought that was the formula already being applied. Curious, the next day Hull called in Acheson, who apparently convinced him that it was Treasury that was respon
sible for delaying Japan’s shipments of oil, because Hull then had Acheson contact Treasury to find out what was going on.

  Hull must have been alarmed to discover that lower-level officials had effectively cut off Japan’s oil for a month, because following his conversation with Acheson, Hull promptly headed for the White House. No record of what Hull told FDR over their lunchtime meeting that day has been found, but Roosevelt was likely shocked to learn the news. He faced significant political hurdles in restarting oil sales to the Japanese. The China Lobby—T. V. Soong, Tommy the Cork, Lauchlin Currie, Felix Frankfurter, Henry Stimson, Henry Morgenthau, Dean Acheson, and many millions of others in Protestant congregations, the U.S. Congress, and the media—was a palpable political force. The Stimson Committee had convinced the great majority of Americans that the U.S. could embargo Japan with no risk to itself. If Warriors within his administration were to go public about FDR restarting oil sales, Roosevelt would have been in the untenable political position of having to explain to all the mirage-believing Americans exactly why Japan should get more U.S. oil to kill Noble Chinese Peasants.

  Hull and Roosevelt elected to leave the situation as it was, so in effect—with neither internal debate nor public announcement—they ratified the unplanned embargo on Japan’s oil. Roosevelt and Hull had lost the administrative control they had used so effectively for over a year in their battles with the Warriors. Acheson would later boast, “Whether or not we had a policy, we had a state of affairs; the conclusion, that until further notice it would continue.”8