894.51 So 8/20: Telegram

The Ambassador in Japan ( MacVeagh ) to the Secretary of State

132. [Paraphrase.] My telegram 128 of November 21. It is reported here that J. P. Morgan & Company has refused to make loan to South Manchuria Railway and there is a prevalent impression that the responsibility lies with the Department of State. Yesterday Dr. Dan59 called on me on behalf of Mr. Yamamoto, president of the South Manchuria Railway. Dr. Dan said that they all felt that the reason for the refusal by J. P. Morgan & Company was the unwillingness of the Department to pass the loan in the face of Chinese protests. He said they were much disturbed by this attitude on the part of the United States, in part because of the effect it might have on Japan’s internal situation. I gathered that he meant the arousing of resentment against China because of interference by Chinese leaders. I told Dr. Dan that the only press reports which I had noticed were, first, that the Department had stated that it did not object to the loan and later that the Department had reached no decision as no formal request had been received from J. P. Morgan & Company. I said my inference was that the bankers had refused the loan on other grounds. In view of the uncertainty and conflicting rumors, I think it would be helpful if the Department would send for my own information a summary of what has occurred and also some statement that I could give to the press here if I should deem it advisable. [End paraphrase.]

The Japan Chronicle, a British-owned and edited newspaper, ordinarily hostile to Japan’s Manchurian policy, in an editorial yesterday on the Morgan loan stated:

“It is difficult to see how the Department of State can now avoid the charge of taking sides; if it agrees to the loan, there will be a great outcry in China that the United States is in partnership with Japan in the exploitation of Manchuria; if it disapproves of the loan, there will be a feeling in Japan, though probably not so much outcry (for favors to come nave to be considered) that the United States is taking the part of the Chinese agitators against Japan. Indeed, for the Department of State to stop a loan to the South Manchuria Railway, in the circumstances that have arisen, is to censure the whole of Japan’s Manchurian policy.”

  1. Dr. Takuma Dan, president of the Mitsui Co.