Japan and the U.S.
Also sponsored by Peace Pins
1937 to 1940: U.S. Economic and Proxy War with Japan
All [page numbers] reference China, Japan, and the Powers by Meribeth E. Cameron, Thomas H. D. Manhoney, and George E. McReynolds. The Ronald Press Company, New York. Copyright 1952
Panay Incident. On December 12, 1937, the U.S.S. Panay and three Standard Oil tankers were bombed and sunk by the Japanese. The Japanese government quickly apologized.  Per Wikipedia, [See also Panay Incident], occurred on Yangtze River outside Nanjing [former Nanking] during the course of Japanese military operations against the Chinese military. The attack was on orders. An indemnity of $2.2 million was paid.
States Germans who were helping the Chinese military withdrew in 1938; so for a few years the Nazis were giving military aid to Chiang Kai-shek. 
A nice Japanese Foreign Minister note from 1938 quote: “At present Japan, devoting its entire energy to the establishment of a new order based on genuine international justice throughout East Asia, is making rapid strides …” going on to say their aim is “enduring peace and stability” while inviting the U.S. to continue commerce as long as it is not inimical to Japanese plans. “… and further, I believe that the regimes now being formed in China are also prepared to welcome such participation.” 
1939 saw Baron Hiranuma become Premier of Japan; he was anti-U.S. Discussions of an alliance with Germany and Italy were underway. Cordell Hull warned them off. 
In 1939 Japan occupied a number of islands, notably Hainan and the Spratly Islands. On July 26, 1939 the U.S. government notified the Japanese government that it planned to abrogate the treaty of commerce and navigation of 1911. Japan was further shocked by the Nonaggression treaty between Russia and Germany, which left Japan with no allies among the Powers of the world. Japan announced its neutrality in the war between Germany and Poland. [482-483]
In 1938 the U.S. had instituted a Moral Embargo, which “prevented aircraft, aircraft equipment, and aerial bombs from going to Japan from the United States.” But trade in metals continued. On December 2, 1939, President Franklin Roosevelt expanded the moral embargo to aviation fuel and techniques for producing it. [483-484]
Not liking the U.S. puppet government of Chiang Kai-shek, the Japanese helped nationalist Chinese establish a new national government in Nanking (now Nanjing) under the leadership of Wang Ch’ing-wei (or Jingwei). The authors characterize his government as a Japanese puppet government. Hull denounced the Wang government. [484-485]
The Japanese expressed an interest in the status of the Dutch East Indies in 1940, given that the Netherlands were overrun by Germany. Hull said the U.S. was interested too. Hull argued that the Root-Takahira Agreement of 1908, which promised to respect the status quo in the Pacific, should be interpreted as giving permanent colonial status to the Dutch East Indies. But the Japanese demanded an open door of their own to the Indies. 
On June 20th the French signed an agreement with Japan prohibiting supplies of military equipment to China through colonial Indochina. Later in June Japanese troops surrounded Hong Kong; Britain agreed to close the Burma Road to China on July 18. 
In the U.S. the National Defense Act, which allowed the President to control exports. On July 2, 1940 most military industry items were prohibited for export to Japan, the exceptions being oil and scrap iron, but they were added to the list on July 25. The Japanese protested to no avail. As time passed more items were added to the prohibited list. [486-487]
Japan reached an agreement with French officials in IndoChina [nominally under the fascist, Catholic, Petain or Vichy regime] to establish bases there. The Dutch East Indies agreed to supply Japan with oil. 
Chiang Kai-shek started to receive more aid in 1941, in the form of money, war planes, and volunteers, including aviators. The U.S. also reinforced the Philippines. 
The Japanese made an alliance with Thailand, which gained bits of Laos and Cambodia.
British and American leaders, by March 1941, had formulated a war strategy against Germany, Italy, and France .
Secretary of State Cordell Hull’s demands on Japan of April 16, 1941 are almost a parody. The U.S. demanded of Japan what it would never demand of itself or its European allies. It demanded “Respect for the territorial integrity and sovereignty of each and all nations.” That, while the U.S. still had a colony in the Philippines. 
Nevertheless, the Japanese presented a counterproposal for peace on May 12, 1941, in which the U.S. would induce its puppet government in China to negotiate an end to the war with Japan (and its puppets) in China. The U.S. basically demanded that the Japanese get out of China, and leave colonialism to white people. [489-490]
In July the U.S. discontinued peace talks with Japan and on July 26, 1941 Roosevelt “issued an executive order freezing Japanese assets in the United States.” 
On August 6 the Japanese proposed that the U.S. end its trade embargo, suspend its own military operations in the south Pacific, and negotiate a peace in China, after which Japan would withdraw its troops from Indochina. The U.S. declined the proposal and rejected a proposal that the Japanese Prime Minister negotiate directly with the President. 
A new Japanese government led by General Tojo with Togo as Foreign Minister took office on October 17, 1941. They continued to press for a peace agreement with the U.S., which was again rejected. 
The U.S. also demanded that Japan break its treaty obligations with Germany and Italy, if it wanted peace with the U.S. 
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