Abstract
The gloomy tenor was indeed warranted. In the year that was ending, Grew had watched the Japanese establish a puppet government in Nanking, occupy northern French Indo-China, solidify its relations with the Axis powers by signing the Tripartite Pact and take its first steps toward including the Dutch East Indies within the East Asia co-prosperity sphere. Japan was feeling the effect of ever-increasing economic pressures from the United States which had abrogated its thirty-year-old commercial treaty and instituted embargo and license procedures which, by December, 1940, had cut off the flow of such vital products as aviation gasoline and iron and steel scrap. Of the commodities Japan desperately needed from the United States, only oil was still moving in December, 1940, albeit in quantities far short of Japan's expanding needs. American sanctions-and the threat of more severe sanctions-found a response in Japanese strategic planning which was becoming ever more expansionistic. The provocation-sanction spiral toward war was in full swing, and Japanese
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