The New Dealers' War
Book Notes #12
The New Deals’s War, by Thomas Fleming, chronicles President Franklin Roosevelt’s strategy to get America into WWII.
The first three chapters examine Roosevelt and his cabinet’s disposition toward war with Germany, and speculate in some areas on how Roosevelt ultimately achieved this.
To readers of this blog, most of this will be well understood, but I will add some specific references.
Roosevelt was always intent on going to war in Europe to destroy Germany, and only wanted a holding action in the Pacific until Germany was defeated. It is well known that the United States eventually placed an oil embargo on Japan, but you may not know that the Secretary of the Interior, Harold Ickes, placed just such an embargo on his own accord in the spring of the same year, only to be firmly rebuked by Roosevelt, who told him that premature war with Japan would lead to fewer ships in the Atlantic.
Ickes wrote in his diary on October 18, 1941 (p. 17):
“For a long time I have believed that our best entrance into the war would be by way of Japan . . . And, of course, if we go to war against Japan, it will inevitably lead us to war against Germany”
It is made clear that war with Japan was merely a vector by which to attack Germany. Mr. Fleming elaborates:
“The idea of using Japan as a back door to war with Germany was already in circulation. Shortly after FDR was reelected in 1940, Chief of Naval Operations Harold Stark wrote a memorandum that became the basis for War Plan Dog. It was, in the words of one historian, the “true parent” of Rainbow Five. Stark envisioned the U.S. fighting a limited defensive war with Japan while Britain and America combined forces to defeat Germany. Plan Dog was the enthusiastic approval of Army Chief of Staff General George C. Marshall, and Stark was told that Roosevelt was “probably delighted” with his thinking. The probable delight became certainty when the president authorized secret conferences with British military men to plan combined operations based on the concept.”
Rainbow Five is the leaked plan to attack Germany that made headlines in the U.S. only a few days before the Pearl Harbor attack, and the subject of the first two chapters. Mr. Fleming puts forward the theory that President Roosevelt, himself, leaked the plan to the press, which is based on numerous circumstantial pieces of evidence, but we will get to that in a second.
First, the situation with Japan, as it evolved in 1941, escalated to a de-facto oil embargo on Japan on July 26th, 1941. While many people believe that there was a de jure oil embargo on Japan, I can find no evidence that this ever happened. It is possible that other countries did so, or ceased oil trade, but the United States never did so.
Executive Order 8832 amended Executive Order 8389 which amended Executive Order 6560 in order to produce an asset freeze that functioned as an unofficial oil embargo.
Executive Order 8832 simply reads:
“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 subdivision (j) of Section 3 of such Order to a semicolon and adding the following new subdivision thereafter:(k) June 14, 1941 —China, and Japan.”
Okay. So, if we read Executive Order 8389 we find that it just adds sections 9-12 to Executive Order 6560, so if we read that EO, we find a section 3 that contains no subdivisions. Hm.
It turns out that there is another Executive Order 8785 that modifies EO 6560 to have the stated subdivisions. It is titled “Freezing the Assets of Certain European Countries,” so this is the one we want. What this order does is require the listed countries to obtain a license from the Secretary of the Treasury to have their assets unfrozen for a specific purchase. All of Japan’s assets in the U.S. were therefore frozen, unless Japan went through the Department of State to the Treasury Department, which, as Mr. Fleming writes, left “ample room for maximum bureaucratic foot-dragging.”
Secretary of the Treasury Morgenthau, a diabolical character that readers will be familiar with, wanted a complete oil export embargo on the Axis powers, in cooperation with the other Allied powers. He attempted to trick Roosevelt into a signed a version of regulations that would do so, but the State Department intervened to ensure the the version Roosevelt himself had ordered drafted is what was signed. Roosevelt had said to the Undersecretary of State Sumner Welles:
“measures [be] taken with the least possible delay to control the exportation of aviation gasoline and lubricating oil for aircraft engines, in order to conserve these materials in the interest of national defense”
That quote is taken from page 207 of an entirely separate book, The 1941 De Facto Embargo on Oil to Japan: A Bureaucratic Reflex, by Irvine H. Anderson, Jr. This more limited regulation was signed and into place, although, as this other book states,
“As it turned out, however, the hastily drafted definition of "aviation gasoline" issued on July 26 almost gave Morgenthau what he wanted anyway, and this administrative detail became the hidden crux of American oil policy for the next twelve months. The regulations of July 26 specified that henceforth licenses would be required for the export of all
“Aviation motor fuel, i.e., high octane gasolines, hydrocarbons, and hydrocarbon mixtures (including crude oils) boiling between 75 and 350 F. which with the addition of tetraethyl lead up to a total content of 3cc per gallon will exceed 87 octane number by the A.S.T.M. Knock Test Method; or any material from which by commercial distillation there can be separated more than 3% of such gasoline, hydrocarbon or hydrocarbon mixture.”
The State Department's Division of Controls and the Office of the Administration of Export Control were immediately deluged with industry requests for clarification of governmental intent because this definition could be interpreted to require export licenses for “approximately 90% of all crude oils produced in the United States ... substantially all motor gasolines ... [and] ... all the light pro- ducts of petroleum up to kerosene.””
The narrow definition settled on by the State Department was that the Japanese would be allowed to purchase gasoline below the octane rating of 87, which did not seriously impact their supply of fuel. the July 26th in the above quote was July 26th 1940, exactly one year before the freezing of Japanese assets. Morgenthau would work for the next year to achieve his crude oil embargo.
In preparation for the 1941 freeze Welles:
“put his staff to work, and by July 21st the State and Treasury departments had tentatively agreed on draft documents to freeze Japanese funds, lower the octane on permissible gasoline shipments, and establish a reduced quota for all petroleum products based on the “normal” years 1935 and 1936.”
But Roosevelt again softened the sanctions, reiterating that:
“the United States would “continue to ship oil and gasoline,” but directed that the freezing order itself be all-inclusive so that “policy can be changed from day to day without issuing any further orders””
Now, we get to the “maximum bureaucratic foot-dragging” mentioned by Mr. Fleming. It is worth quoting at length from the Anderson book to show exactly how this worked:
“Administration was to be guided by the Foreign Funds Control Interdepartmental Committee, with licenses granted “for the shipment of petroleum as the applications are presented to the Treasury,” although this policy “might change any day and from there on we would refuse any and all licenses.” To preserve this internal flexibility there was to be no immediate public announcement on oil policy, and news of the financial freeze was released to the press on the 25th without qualifying clauses-leading to widespread public belief (shared by the Japanese government) that oil shipments had been completely blocked along with other trade. Within the upper echelons of the American government Roosevelt's decision appears to have been clearly understood. On July 25, the Chief of Naval Operations, Admiral Harold Stark, alerted his fleet commanders and their army counterparts to the impending financial freeze, but noted that “export licenses will be granted for certain grades of petroleum products... and possibly some other materials.”
The financial freeze was instituted promptly, but administrative arrangements for the new policy of reduced oil shipments took longer. Acheson's Interdepartmental Committee hammered out the final details, Welles obtained Roosevelt's approval on July 31 and by August 9 Maxwell's Export Control organization had established a more restrictive definition for “aviation gasoline” and detailed quotas for permissible exports which, unknown to the general public, remained in full legal effect until after the attack on Pearl Harbor. Outstanding petroleum export licenses had been revoked on August I with a cryptic announcement that applications could be resubmitted but would not be approved if they exceeded “prewar quantities” or involved “fuels and oils suitable for use in aircraft and . . . certain raw stocks from which such products are derived.” Shippers now had to apply first at the Department of State for an export license (under unannounced criteria established by the semi-independent administrator of Export Control) and then at the Treasury Department for an exchange permit (under criteria yet to be established by the Interdepartmental Foreign Funds Control Committee), with no advance guidance as to what might be acceptable. To cap this administrative edifice, the long- discussed Economic Defense Board under Vice-President Wallace was established with ill-defined advisory responsibilities by executive order on July 30,74 and the principal architects—Roosevelt and Welles—left Washington August 3 for secret talks with Winston Churchill at Argentia, Newfoundland. In retrospect, the chief product of Japan's occupation of southern Indochina was not embargo, but an unguided bureaucracy biased at the working level against liberality towards Japan.
Although by mid-September this maze had congealed into a de facto embargo, it should be clear from the above account that this was not Roosevelt's original intent. The initial termination of shipments from both the United States and the Indies was the result of a bureaucratic tangle as various agencies, governments, and companies attempted to discern the real intent of American policy and adjust their own actions accordingly. As it turned out only one small shipment of lubricating oil left the United States for Japan after the revocation of export licenses on August 1, and the last delivery from the Indies was a cargo of crude shipped August 5 under Shell's Batavia contract aboard the Japanese tanker San Pedro Maru.”
I do not believe Mr. Anderson’s conclusion that the de facto oil embargo was not the intent of President Roosevelt; but, it does appear that there in fact was never an “oil embargo” de jure on Japan, merely the manipulation of procedural outcomes to illicit a similar effect. We will now return to the matter at hand, The New Deals’s War.