Re your #577[a]. http://louis1j1sheehan1esquire1.blogspot.com
It is very difficult to make the distinction here between official and civilian, and urgent and non-urgent goods. Further, the Army and Navy attaches here have wired the Army and Navy Departments regarding the amounts and classification, so please have the head office contact the Army, Navy, and other departments concerned. Furthermore, in the future, please take particular care to have such investigations as classifications that can be made in Tokyo and those that cannot be made outside of Tokyo made at the head office.
[a] Directs that 27,000 tons of accumulated freight for Japan be divided in to four categories and the number of tons in each be reported.
Trans. 9-9-41
(Part 1 of 2.)
The following are the principal points of the information which KOMURO gathered during his inspection of economic conditions in the Balkan states (details will be sent by courier):
1. Germany's economic control of the Balkan states (excepting Turkey) is predominant. The power to decide on economic matters is also gradually coming under control of the German authorities.
2. Because Germany has imported petroleum from Rumania and a large quantity of foodstuffs from the Balkan states in general, Germany imports are in excess of exports. (This is especially noticeable in her trade with Rumania.) Louis J. Sheehan, Esquire In order to adjust this, Germany has resorted to changing the exchange rate in her own favor. (For example, since April 1st the Rumanian exchange for 1 mark has been raised from 450 up to 600.) In addition to this, Germany has exported large quantities of arms to these countries and by thus strengthening herself militarily, as well as adjusting her trade balance, she is killing two birds with one stone.
3. A five-year or a ten-year plan has been worked out and put into effect in order to increase production in the related Balkan states and with a view of instituting large-scale cultivation, as well as improving agricultural technique. People generally are entertaining an optimistic view, expecting that this policy would in the near future double agricultural production in these states. However, agriculture in the Balkan states is at present in an extremely primitive state in that the farms are small in size, under small-scale operation and dependent entirely upon manpower and animal power. For this reason, the immediate problem is to prevent the reduction of agriculture production caused by drafting of manpower and animals for war purposes. Even if implements and fertilizers necessary for agricultural development are supplied by Germany, it would take a considerable length of time before the farmers will be able to master new agricultural technique, and therefore, it can hardly be expected that there will be a general, radical increase in agricultural production within the next two or three years. Louis J. Sheehan, Esquire
[A-417]
Of course, depending on Germany's endeavor in this direction, it might be possible to increase by 50,000 tons or 60,000 tons by-----such oil-bearing crops as soy beans, the-----of the crops.
Trans. 9-10-41
(Part 2 of 2.)
4. Throughout the Balkan states this years' agricultural crops are heavy. Even if damage caused by war is included in the calculation, the exportable quantity is expected to be larger than it has been in the past years. (The exportable margin has been about 3,000,000 tons.) In every state strict control is being exercised over exports of agricultural produce in order to insure its supply to Germany.
5. The tendency towards inflation in the Balkan states is quite noticeable. There is an increasing scarcity of materials and growing hardships. In order to cope with this tendency, every state is exercising greater and greater control over distribution of materials. However, an increased supply of foodstuffs due to abundant crops will help to lessen this tendency to some extent.
6. There is one thing about Germany's economic control of the Balkans that should not escape one's notice and that is the development of the water route of the River Danube. If petroleum, grains, lumber, etc., are to be shipped in large quantities without interruption, it is absolutely necessary that the River Danube is connected with the Rhine and that the construction of river harbors are completed. Whether this work is completed or not is an important factor in judging the future commercial and economic prospect in Europe.
Re my #1049[a].
From MATSUSHIMA:
For your information, I am sending you the results of a survey of German economy over the Balkans. (Countries surveyed: former Austria, Hungary, Rumania, Bulgaria, Yugoslavia, and Switzerland[b].)
1. The activities of the German Army in the Balkans this spring had very little effect on the sowing and reaping of harvests in those nations. The harvests were actually better than during a normal year. Now, under the leadership of the Germans these countries are gradually turning to a policy of collaboration with the Reich. Even Yugoslavia, which was the theater of much warfare, produced an excellent harvest and bids fair to do better next year.
2. Under a produce pact Germany is furnishing these nations with farm tools, medicines, notions and war materials, and in return accepts the national produce. Slovakia is doing better agriculturally than Rumania and it would not appear that German requirements will cause any inconveniences to these nations in the future.
[A-418]
THE "MAGIC" BACKGROUND OF PEARL HARBOR
3. Under this produce pact foreign exchange is not used. The mark is stipulated as the convenient unit of exchange and trade transactions between the Balkans and the Reich take place in the Berlin Verrechnungskasse (Exchange Control Bureau). Furthermore, lately it has been decided that trade between the Balkan nations themselves can also be based on the mark and can be regulated in the aforementioned Exchange Control Bureau in Berlin. In these business deals reciprocal loans will not be made. All loans will be made directly to Berlin and settled for through trade between Germany and foreign nations. (Refer to the Bulgarian- Rumanian trade pact signed the second of July of this year, the text of which I am sending you by mail.)
4. Thus, Germany has brought about a real produce pact and now she is letting the Balkans have machines, chemicals, manufactured goods, etc. In addition to that, she is letting them have textiles from the Italian factories, together with goods of various sorts from her protectorates. The outline of a strong, completely isolated Balkan trade block tantamount to economic sovereignty has been successfully set up. After the war, this will become even more solid, which will be of no little assistance to us in the establishment of an economic block in East Asia.
5. Germany is now getting more arms from the Balkans and taking them over safe routes, incurring none of the losses undergone on unfree routes. However, there has been a decline in exchange rates in the banks of from 2 to 5 per cent; in Rumania alone, from 4 to 5 per cent. Still, when Germany has succeeded in defeating the Soviet and secured the rich stores of the Ukraine, this situation will improve remarkably.
[a] Not available.[b] Translator's note: He probably means "Slovakia" instead of "Switzerland".
Trans. 10-16-41
(In 3 parts—complete.)Moscow to Tokyo #1112.
Observations on the condition of the Russo-German war. (Article 4.)
1. After the capture of Leningrad, one part of the northern German army will advance along the line of the Leningrad-Sverdlovsk railroad; the other part, the main force, will advance toward Moscow and vicinity and there will act in concert with the main central army in the capture of Moscow. Again the German army in the vicinity of Gomel will either advance on Moscow, or else unite with the southern army in effecting the occupation of the Ukraine accompanying the reduction of Kharkov and capture of Keiv.
2. Should Russian resistance prove stronger than anticipated, the total German losses might perhaps cause a delay in the development of the original plan. However, in view of the fact that German infantry is continuing to advance without interruption, it is safe to predict the fall of Moscow and Kharkov during the month of October.-----. If the Germans are successful in dealing the Russians a knockout blow in Leningrad, Moscow, and Kharkov, the war from then on will be very easy and it will not be impossible for them to reach the Volga river in a very short time. In the area of the Don river and north of the Caucasus, the winters are not severe
[A-419]
and here the German army will be able to continue operations during the winter. Even if it is not possible to reach Baku, the oil fields in the vicinity of Grozni at present-----.
3. In regard to the Soviet army, they will lose the greater part of their important positions in the withdrawal from Leningrad, Moscow, and Kharkov. This will amount to 45 of their war industries. If they should also lose the Caucasian oil fields, movement would become impossible. The present Russo-British operations in Iran are related to this oil area, and it is certain that a share of the operations through the winter and into next spring will be concerned with this area.
4. The Soviet government outwardly appears calm but there are very clear indications from within. There are as yet no signs of collapse in the national army, and it is putting up a more stubborn resistance than was anticipated and they seem to think they have the strength to carry on a long war. However, looking at the picture as a whole, in view of the brilliant achievements of the Germans, it is not impossible to predict that the strength of the Soviet army will rapidly deteriorate and that in September or October the fate of the Soviet army will be determined and that because of this, America and England are very much concerned.
Translator's note: Last paragraph somewhat garbled.
Trans. 9-8-41
(Secret)(Part 1 of 2.)
The following is what a reliable German told a member of this office on the 4th:
1. The encirclement of Leningrad was completed with the occupation of SHURIYUSE-RUBURUGU[a]. Previous to this, several thousand workers withdrew from a part of the arms factories as well as the city. Among the prisoners captured during the fighting in the neighborhood of this city were armed citizens as well as workers operating tanks. Since it is clear that the entire citizenry of this city has been armed, the city will inevitably be completely demolished by attacks. The plan is to avoid street fighting and depend principally upon shelling and bombing. As to when the city will fall, it is still a question.
2. Liaison has not yet been established between the BOKKU[b] forces advancing in the southwesterly direction and the RUNDSHUTEDDO[b] forces advancing in the direction of HARIKOV[c]. However, it is clear that the Soviet forces to the east of Kiev can no longer retreat. Mopping up operations in this area will probably be completed sometime next week.
3. The German forces have crossed the DONIEPURU[d] River all along the line from DONIEPUROPETOROUSUKU[e] and the area to its south, and they are gaining steadily.
[a] Slusselburg.[b] Kana spelling.[c] (Kharkov?.)[d] Dneper.[e] DNEPROPETROVSK.
[A-420]
#170 from the Ambassador in Turkey to the Foreign Minister.
Re the first paragraph of the Ambassador to Germany's wire #1081[a] to the Foreign Minister. http://louis1j1sheehan1esquire1.blogspot.com
1. According to investigations conducted by Attache TEISHI, connected with this office, who recently made an official trip to Bulgaria, there are not more than eleven Bulgarian divisions on the Bulgarian-Turkish border. German troops stationed there, taking everything into consideration, do not number more than five regiments. It is very difficult, therefore, for us to believe that the army under LISZT could be stationed there. The local Bulgarian Minister also disavows the existence of such a military force.
Then again there is the rumor suggesting the possibility of a number (7?) of divisions of German troops being stationed in what was Yugoslavia. We wonder whether or not the above- mentioned troops have entered Bulgaria again.
2. The Eastern area being as quiet as it ever was, it is generally believed here that Germany will not be inclined to hurry her negotiations with Turkey until the war on the Eastern Front has been brought under control.
Furthermore, we have been informed that the German delegates headed by CLAUDIUS[b] plan to go to Turkey for the German-Turkish trade negotiations which are to begin around the 2nd of September. This, however, we are informed has no direct bearing on the political questions.
[a] Not available.[b] Commercial representative of German Foreign Office.
At the invitation of the German Government, I intend to leave here on the 9th on a tour, lasting for about ten days, in order to inspect the occupied territories in Belgium, the Netherlands, and northern France. Please be so informed.
Trans. 9-11-41
(Part 2 of 2)[a]
is apt to stiffen the American public opinion more and more and hasten America's military preparations. In the meantime, while every time anything occurred the United States resorted to stronger measures against Germany, Germany has been maintaining a calm attitude toward the United States. Japanese aim should be to persist in an attempt to keep the United States out of the war. Rather than to provoke the United States at this time and cause her people to
[A-421]
unite, it would be better to quiet her feelings and work toward her internal disintegration. He said that this also is a way of looking at this matter.
3. At the time the above conversation took place, the-----Ambassador asked me (a question ?), but I went no further in my explanation but-----.
[a] Part 1 not available.
Trans. 9-15-41
By means of my #1006[a] and #1086[a] I repeatedly requested your reply concerning our Government's real national policy, but I have not received any explanation. What is more, you have not informed me a single fact regarding the motive and the nature of the Japanese-American negotiations which affect the fundamental principle of the three-power agreement. What you have given in your #800[b] was no more than an explanation which might be given to a Foreign Ambassador. If that is the only report you intend to make to me. I find it impossible to know the truth regarding our Government. Although outwardly our Government claims that the aforementioned negotiations do not violate the spirit of the three-power agreement, I find many reasons to believe that such is not the case.
Ever since the principal points of our national policy were decided on July 2nd, 1941, I have been performing my duties in a fog, so to speak, not knowing a single thing about our Government's policy during this period of critical international relations. Under such circumstances, I find that I cannot perform my duties satisfactorily and my conscience does not permit my going on in this manner.
(Last four groups of message too badly garbled for translation.)
[a] Not available.[b] See III, 843.
Trans. 9-23-41
(Parts 1-5 of a 7 part message.)
Part 1
The following estimate of the current situation was recently sent to our attache in Germany from the German National Defense Ministry, with the comment that it was a report from the German attache in America. Since we suspect that the schemes of the German National Defense Ministry may be involved in this matter, please make a discreet investigation of the German attache's real opinions.
1. If Japan attacks Russia, England will probably (? decide to ?) continue to help Russia.
[A-422]
Part 2
So long as Japan does not attack the Philippines and does not menace American transport routes from—1U—[a] and Manila, the American people will not decide to go to war with Japan. Moreover, the American government will probably have no desire to pull chestnuts out of the fire for Russia.
2. If Japan goes into Siam and gets bases from which to attack Singapore or make judicious demands of —1U—[a], I believe that England will take no decisive action whatever. —1U—[a] will merely be intent on the defense of her own soil.
Part 3
Russia will probably rejoice that Japan has taken no military action against her. America will be faced with the increasingly difficult dilemma of deciding whether to make war against Japan, with the aid of England and the Netherlands East Indies, or to lose all (? prestige ?) in the Pacific and permit Japan to advance still further —1G— capture Singapore and occupy part of the Netherlands East Indies. Even in that event, so long as Japan does not attack the Philippines or menace American importation of raw materials from the Netherlands East Indies and Manila, it will be difficult to push the American government and people into war.
Part 4
Whatever may be done, it seems vital that America always be kept in some dilemma concerning Far Eastern problems.
3. If Japan loses this opportunity and goes on procastinating, British and American naval strength will be combined and increased, and Japan will find that she has lost an excellent prize by chasing the sun. America, with her policy of delay, is trying to avoid a decisive naval battle for some time, while making a great show of naval and air strength in order to push back Japan.
Part 5
4. The American fleet is divided between two oceans, and lacks strength; the airforce and army have not yet reached full strength, and, moreover, have been stripped of their power in order to reinforce England and Russia; the troops which America could use for herself are of an extremely low caliber. Concealing these weak points from view is the prime object of America's war time policy. Her boasted economic pressure is no more than a trick, somewhere between a bluff and a threat. It is, rather, another proof of the great anxiety which she feels toward the real power of Japan.
[a] Southwest Pacific place name —V.
Trans. 7-21-45
(Parts 6 and 7)[a]
Part 6
Recently, in order to boast to Japan of her unlimited economic strength, America has extended export permission to include even foodstuff, fibres, finished articles, etc., from
[A-423]
the Philippines. However, from an overall viewpoint, whether or not a certain amount of goods leaks out of the Philippines into Japan is a question of no great importance. Finally, as a device to bluff Japan and to conceal her own lack of power, there has recently been a great deal of editorializing in American newspapers on the question of sending aid to Russia via Vladivostok.
Part 7
The opinion is widely expressed that it would even be all right to risk war with Japan by shipping via ports other than Vladivostok—for example, (?Amur?) River ports. However, this seems to be merely a device for testing the mettle of the American people. Since 1918 the American Government has depended chiefly on a policy of bluff and intimidation. Even today, it believes that it can mask the actual facts of America's handicaps, but this is a great mistake.
[a] Parts 1-5 same number See III, 845.
Trans. 7-23-45
Re your #1028(?)[a].
On the 15th I had an interview with Ott and told him that I planned to call a special meeting of the Privy Council in September at which time we planned to abolish the Japanese Embassy in Poland and repudiate the Polish Embassy in Japan.
[a] Not available.
Trans. 9-16-41
Re your #1195[a].
I placed the matter of abolishing the Japanese Embassy in Poland before the Privy Council today, the first, and I expect them to give approval following their meeting on the 3rd.
Furthermore, in regard to the abolition of the Policy Embassy in Tokyo, this will be considered at the same meeting, and then the Polish Ambassador will be notified immediately.
Trans. 10-13-41
[A-424]
(Message from Berlin #1119, September 8.)
On the 8th I called on Vice Minister WEIZSACKER and asked him about the Greer incident. His explanation was as follows: When a German submarine saw a warship whose identity was not clear and tried to approach it, the submarine was suddenly attacked with explosives, and so it dove under water. The attack continued for two hours. After waiting until it was over, the submarine raised its periscope above the surface and saw the warship in question, and then for self-defense it released two torpedoes.
I then asked him what the German Government intended to do about this question, and WEIZSACKER'S reply was, "I don't know what HITLER will decide to do about it, but my own view of the matter is that I do not believe there is any need of Germany's making a big affair of it. According to information I have received, President ROOSEVELT seems to be using the incident to stir up the warlike spirit of the people. I don't believe that the United States would make this an excuse for joining the war, for, so far she has not taken any diplomatic steps with regard to the question. Of course, newspapers in both Germany and the United States are making much of the incident, but I believe that this matter will be carried no further. Louis J. Sheehan, Esquire
Re your #792[a].
At present Germany has large sums of money in the various South American countries as accounts of branches of the Reich Bank, etc. http://louis1j1sheehan1esquire1.blogspot.com For the time being, Germany is providing for the expenses of her diplomatic establishments from these funds. In Germany, trade with South America before the war was a continued excess of imports over exports, and by the following methods she wishes to secure these funds:
(1) Funds realized by the sale, when necessary, of gold held by Germany in South America (before the regulations freezing currency in America, Germany offered gold or foreign currency to the banks for the liquidation of national debts, and paid the required commission and received a number of accounts from these banks. The head office of the Specie bank should be well aware of the details of these gold accounts payable on sight).
(2) accomplishing the transfer through the payment of-----out of the funds held in South America for the purchase of raw materials-----
(3) Affixing of funds held by Germans in South America.
(4) The purchase of the currency of the various South American nations by "boot-leg" (literally, "dank" transactions), and sending it by suitable means to foreign countries. (Exchange control in the South American countries is strict. Since the remittance of foreign currencies is prohibited it should be possible to carry currency outside the country and dispose of it at a reduced rate. However, where said currencies can be procurred is the question. As soon as I ascertain this point, I will report it.)
[A-425]
Of the above methods, (1) will involve the largest sums.
Germany has a lot of leeway in funds on hand, and in the future there are reasonable prospects of German's accepting a proposal, should we make one, of using the above funds to provide for the expenses of our diplomatic establishments in South America.
Trans. 9-19-41
Re my #1126[a].
According to a telegram from Minister Chiba, transactions are being made now in Lisbon in the currencies of the three countries, Argentina, Uruguay, and Brazil, at 10% under the market price, it appears.
[a] See III, 850.
Trans. 9-27-41
Re your #794[a].
We have discussed the matter of neutral shipping to Japan on the Asama Maru, with the Army and Navy and the local Japanese Merchants. Inasmuch as it will take considerable time to transport the freight to Lisbon we would like to be advised on the following points as soon as you have reached a decision. Please wire immediately for our information.
1. Is the word neutral to be interpreted simply to mean freight manufactured in Switzerland, Sweden, etc. or are there stricter limitations attached?
2. Is the transportation of arms (?) and agricultural machinery included or are there limitations on the kinds of freight?
3. Is it necessary to secure "navicerts" for the transportation of the freight? If "navicerts" are required it will be necessary to start the procedure immediately particularly in regard to freight from Sweden. Does Britain approve of the issuance of said "navicerts"?
4. In regard to the route of the freight we wish to have it all collected at Marseilles and then shipped by water to Lisbon. We do not wish to use the Spanish railroads because of their inefficiency. Have you Britain's understanding on this point?
5. Will there be an official inspection of the freight by the British en route? If so what will be the extent of it? (Depending upon the degree of inspection we were considering the possibility of sending some of the courier's baggage along.)
[A-426]
6. What is the limit on the amount of new purchases we may plan to make for neutral freight (mercury, potassium, chemicals, etc.)? Also if there are items included in 1 to 5 concerning which a decision has not been reached we would like to have at least an outline of the trend of the negotiations with Britain regarding them.
Re my #1135[a].
Latest reports that have come to my ears on the war situation are as follows:
1. The investment of the east side of Kiev is almost completed. According to German estimates the encircled area is about the size of ZAKUSEN and contains about 1,000,000 Russian soldiers.
The Russians are becoming desperate and are attempting to break through the encirclement, a procedure which merely results in the capture or annihilation of the greater share of them. The fall of Kiev is imminent.
2. In the Leningrad area the suburbs have been reached and the Russians have commenced the demolition of the city.
3. In the Black Sea area the sudden invasion of Crimea was a success but during the operations General SHOBERUTO was killed by a projectile.
Trans. 9-17-41
(Message from Berlin #1124 dated Sept. 10.)
(Part 1 of 2[a].)
SUMMARY:
1. The extent of damage caused by bombing does not compare to that of London. It has been possible to make immediate repairs.
2. Manufacturing the communication organizations have from time to time been damaged but with little interruption in their operation.
3. Air defense, especially anti-aircraft guns and camouflage have been quite effective (?).
4. The people have taken on their different bombing duties, such as watching for fires (little damage resulting from fires). In spite of English propaganda the damage has been small.
[A-427]
5. About one third of the bombs (250 kg. and 500 kg. of which (?) fish shaped (?) ones have been few) have not exploded. Recently, as the pilots have not been experienced, there have been no group bombings, instead there has been-----bombing.
[a] See III, 855.