893.51/2108a: Telegram
The Acting Secretary of State to the Commission to Negotiate Peace
588. For the Secretary of State. Your 443, January 26, 11 a.m.67 Department’s 399, January 24, 6 p.m.68 I had a conversation with the Japanese Ambassador on Friday, January 31, in regard to the subject matter of the telegrams above referred to. He stated that he would send me a memorandum of the conversations he had with you on May 6 and May 11 last, and I consented to cable them to you. I have received the memorandum and hereby transmit it as follows: “On May 6th, 1918, the Japanese Ambassador under instructions [Page 560] approached the Honorable the Secretary of State on the question of the proposed employment by China of Baron Sakatani as financial adviser.
In his conversation with Baron Hayashi69 on April 24, the American Minister at Peking was reported to have made it plain that he had no sympathy with the employment by China of Baron Sakatani as financial adviser, and expressed displeasure at the line of action adopted by the Chinese authorities in this matter.
Considering how the American Group had withdrawn in 1913 not only from the loan aiming at the reform of China’s currency system but from various other enterprises in China, and how they had declined to entertain the invitation of the other groups of the Consortium for participation in the Supplementary Reorganization Loan which at the instance of the American group it was agreed should incorporate the currency loan above referred to, the Japanese Government were unable to understand the displeasure shown by the American Minister in regard to the proposal of Baron Sakatani’s employment.
This proposal did not of course mean that Japan was to lay exclusive claim to the work of currency reform in China. On the contrary the immense amount of capital needed in connection with this enterprise naturally called for the cooperation of American capitalists, and the Japanese Government always entertained the earnest hope that the American group might yet find their way to participate in the supplementary Reorganization Loan. A perfect understanding on this point on the part of America was particularly desirable.
It was further pointed out in regard to Baron Sakatani’s status that while as financial adviser he might naturally be called upon for counsel in the preparatory work of currency reform, he would not be, properly speaking, a currency adviser from the beginning. Only, it was understood, that on the completion of the Supplementary Reorganization Loan for the Currency Reform, he should be made currency adviser. In this respect, Great Britain, as well as Russia and France, had expressed consent to the Japanese Government.
In view of these facts the Japanese Government had every confidence that the American Government would not raise objection to the appointment of Baron Sakatani as financial adviser to the Chinese Government, and the Japanese Ambassador expressed to the Secretary of State the hope that the attitude of the American representative in Peking as reported did not reflect the views of the American Government.
Mr. Lansing said that he did not remember any instructions had been sent to Dr. Reinsch in the matter and that he would give his [Page 561] reply after looking into the question and asked Viscount Ishii to talk in the meantime with the Third Assistant Secretary of State.
Accordingly, Viscount Ishii saw Mr. Long on the same day. The Assistant Secretary after explaining what had passed between the American and Chinese Governments on the subject in the course of the last twenty years concluded that the United States had sentimental interest in this question of the Chinese currency reform. He added that no instructions had been given Dr. Reinsch recently on the matter.
The Japanese Ambassador met Mr. Lansing again on May 11th to resume the conversation. The Secretary of State now definitely stated that he had given no recent instructions to the American Minister to China and said that America, having historical interest in the question under consideration, was entitled to be informed of the course the matter was taking. Eventually, Mr. Lansing was good enough to add that after the frank explanation given by the Japanese Government, he saw no objection to the appointment of Baron Sakatani. Viscount Ishii, thanking Mr. Lansing for his friendly attitude which, he assured him, would be much appreciated by the Japanese Government, asked the Secretary of State if he might be authorized to report home that the American Government had given willing consent to the appointment of Baron Sakatani, whereupon he answered: ‘Certainly.’”
There being no record in the Department files of any conversation you had with him on this subject, I refer to memorandum of conversation he had with Mr. Long on May 6, to which he refers: “I told him that I did not remember specifically any instructions on the subject, but supposed that Dr. Reinsch simply expressed the sentimental interest which the American Government felt in the matter of currency reform in China, and in the matter of financial advisor in China; that we felt that we had originated the idea as long ago as 1901; had been instrumental in having appointed a financial advisor, not an American but a subject of a small European country, but that he had never functioned as advisor, having died shortly after his appointment; that we felt that all the powers had an interest in the currency reform in China, but that our interests existed earlier than any of the others and our activities in that respect was of such long standing that we felt that we should be consulted before any action should be taken.”
After seeing me on January 31, the Japanese Ambassador called on Mr. Long and laid emphasis on the use he made of the words “sentimental interests.” On that day Mr. Long told him that “When the word ‘sentimental’ had been used as descriptive of our interest in Chinese currency reform, it was expressive of our very [Page 562] deep, wholesome, and sincere interest, and should not be construed as meaning a light and frivolous sentimentality.”
In view of the importance which the Japanese attach to this particular appointment and to the manner in which it may affect our interests in China, I hope you will give it your very careful consideration and advise me what you desire me to reply to the Japanese Ambassador.