The Chargé in Japan (MacMurray) to the Acting Secretary of State
[Received March 2, 2.44 a.m.]
The Minister for Foreign Affairs being still sick I took occasion yesterday evening to see Vice-Minister Shidehara in regard to your telegram of February 18, 5 p.m. He informed me that the War [Page 302]Participation loan of $20,000,000 was made last summer and Japan[ese] proceeds at once placed to the credit of the Chinese Government with the banking syndicate comprising the Industrial Bank of Japan and the Chosen and Taiwan Banks and is therefore beyond the control of the Japanese Government: and that from time to time the Chinese have, under the terms of the loan contract, drawn sums totaling as he believes about four million dollars. He furthermore stated that when about to despatch troops to Siberia the Chinese Government asked Japan for the necessary funds and that anticipating that its requirements might eventually exceed the resources of Japanese finance, the Government had its Legation at Peking approach the other Allied Legations there with a view to arranging inter-Allied participation [in] the loan but without result; and subsequently it had therefore made the loan itself although it had subsequently refused to make further loan. I remarked that although I had been in charge at Peking at the time I had no recollection of any suggestion from the Japanese Legation. He also said that this Government had previously received from Tong Shao-yi a strong protest against the payment of the balance in behalf of the southern delegates but [on] explanations being made through the Japanese Consul General at Shanghai, Tong had telegraphed that his objections were found to be satisfied.
As to the purchase of arms from the Taihei Kumiai out of the proceeds of this loan he confirmed press reports that, in order to avoid the appearance of contributing to factional strife in China, the Japanese Government had recently interviewed and induced that Japanese company to postpone further deliveries, his understanding being that only the December and January deliveries under the contract had been made.
Upon my expressing the hope that no assistance would be given to the Northern military clique, which might jeopardize the result of the Shanghai Conference, he said that his Government regarded any question of disbanding or organizing further military forces as a matter of China’s domestic concern in which Japan should not intervene. I said that my Government shared this opinion and in view of the association of Japanese officers with the Chinese War Participation Bureau it felt it would be appropriate if the Japanese were to take steps to insure that its nationals gave no encouragement to the plans of the Northern clique to increase their forces. He assured me that the employment of any Japanese military advisers would be means of obviating rather than encouraging factional activities on the part of the Peking authorities.
Although the Vice-Minister expressed himself as sympathetic with the desire for reconciliation in China, the impression left upon me [Page 303]from this conversation is that he feels the Cabinet has gone as far as is politically possible in restraining the Japanese military party from its support of the Tuan faction in China.