Memorandum by the Assistant Secretary of State (Johnson)

The Japanese Ambassador called upon the Secretary today to say that he had been instructed by his Government to convey to the Secretary a reply to the question which he had asked the Ambassador [Page 208] some days ago regarding the raising of legations in China to the status of embassies. The Ambassador stated that his Government had instructed him to say that it agreed in principle with the idea of raising the rank of the legations to embassies, but that there were several outstanding questions at the present time between the Japanese Government and the Chinese Government which prevented the consideration of this question at this time. The Ambassador confirmed the Secretary’s suggestion that these questions consisted of pending negotiations for a commercial treaty, and the settlement of the Nanking and the Tsinan incidents. He added also that his Government felt that they should wait until the Nationalist Government was fairly stable before taking such action.

The Japanese Ambassador then said to the Secretary that he understood the Chinese Government had approached the American Government on the subject of extraterritoriality. The Secretary said that such an approach had been made and that he was considering a communication which he intended to make to the several interested powers on the subject for the purpose of learning their views. The Secretary stated he hoped to communicate this to the Japanese Ambassador shortly.

The Japanese Ambassador ended the conversation by saying that the Japanese Government desired him to express the appreciation of the Japanese Government to the fact that the American Government desired to cooperate with the other powers in regard to these matters. The Japanese Government felt that only through cooperation could progress be made.

The Japanese Ambassador later came to the office of Mr. Johnson and repeated what he had said to the Secretary, which is reported above. He then said he wanted to ask Mr. Johnson informally certain questions. He said that he had understood from the press and from the Secretary that we had been approached by the Chinese on the subject of extraterritoriality. He wondered whether the Chinese had in mind a general treaty. Mr. Johnson told the Ambassador that the Chinese had approached us orally on the subject through their Minister here and that as the Secretary had told him, we were studying the matter somewhat carefully and that we were contemplating a communication to the powers on the subject. The Ambassador asked whether this might be expected shortly and Mr. Johnson stated that he could not tell, that from what the Secretary had told him this morning Mr. Johnson thought the Ambassador might have reason to expect a communication very shortly. The Ambassador suggested that it would take some time to discuss a general treaty, to which Mr. Johnson assented.

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The Ambassador asked Mr. Johnson where Dr. C. C. Wu was. Mr. Johnson told the Ambassador that he was here in Washington. The Ambassador asked whether we recognized him as having any particular status. Mr. Johnson stated we did not, but we knew him to be a representative of the Nationalist Government at Nanking and that he called on us frequently.

The Ambassador asked about the status of the Minister and Mr. Johnson told him that we understood that Mr. Sze was the Minister of Nationalist China in the United States and we accepted him as such.

The Ambassador asked Mr. Johnson about the status of Mr. Frank Lee. Mr. Johnson told him he knew very little about the status of Mr. Frank Lee except that lie was a personal representative of the Nationalist Government and that he lived in New York. The Ambassador stated that he had seen in the papers that Mr. Frank Lee had approached Mr. Owen Young and Mr. Ford and others to ask them to serve as advisers to the Chinese Government. Mr. Johnson told him all the information we had on this subject was contained in the press. Mr. Johnson knew that Mr. Young had been approached as Mr. Young had asked the Department if it had any objection to his serving, if he served, and the Department had expressed itself as having no objection. The Ambassador stated that there could be no question on the part of Japan if the United States desired to send advisers to China, that Japan without question had sent advisers there and the Chinese had not even taken their advice or paid their salaries.

The Ambassador stated that he understood representatives in Peking were discussing the question of China’s unpaid indebtedness and he was certain that undoubtedly we were interested in this matter as we had unpaid debts and claims. Mr. Johnson said we were very much interested in this. The Ambassador stated that in his own opinion the Chinese Government should set aside portions of the increased revenue which they received under the new treaty for the purpose of defraying China’s debts and claims. Mr. Johnson stated that we had not made our tariff treaty conditional in this matter, but naturally we would expect the Chinese Government to make provision out of any revenues which might come to the Government for unpaid American claims and debts.

The Japanese Ambassador stated that he had seen in the papers that the Nationalist Government intended to protest against the loan to be made to the Oriental Development Company. Mr. Johnson told the Ambassador that he had also seen this statement in the [Page 210] press; that the Chinese Minister had called upon him on the instruction of his Government and had asked him about this loan and he had told him that the bankers had communicated the fact of the loan to the Department and that we had made no objection to it. So far as Mr. Johnson knew, the matter was closed. The Ambassador stated that the Japanese Government was very much interested in increased financial relations between Japan and the United States; that New York offered a very favorable market for Japanese bonds and he hoped there would be an increase in these activities and he felt that the Chinese had no right to make objections to financial relations between the United States and Japan. The Ambassador said of course it could not be guaranteed that some of this money might not be used in Chinese business, but after all, it was for the good of all concerned.

The conversation here ended.

N[elson] T. J[ohnson]