793.94/8774: Telegram

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

201. My No. 200, July 14, 6 p.m.

The Foreign Office informed us this afternoon that negotiations at Peiping and at Tientsin are in progress between the Japanese military and local Chinese authorities but that it would still be premature to anticipate the character of the outcome of such negotiations. However, it was said that the release by the Chinese of several captured Japanese policemen and gendarmes had contributed something toward relieving the tenseness of the situation.
In response to a question with regard to the basis of the negotiations, the Foreign Office informant stated that the only basis of discussion is the agreement of settlement said to have been signed by representatives of the Chinese local authorities and delivered to the Japanese on July 11. He said further that if a settlement could be reached of the present disturbed situation it might be possible that the Japanese Government would propose negotiations looking toward a more permanent stabilization of conditions in North China on which occasion it was not unlikely that economic matters would be discussed. He emphasized that the negotiations now in progress are designed to find a settlement of the military situation only.
The Foreign Office informant further stated that Communist agitators are active in disseminating misinformation with regard to the concentration of both Chinese and Japanese troops, press accounts of large bodies of Chinese troops proceeding toward the north being greatly exaggerated, while the reports current abroad of large Japanese troop movements are without valid foundation. He added that thus far no troops of the Chinese Central Government have proceeded north of the line laid down in the Ho-Umezu agreement.
Again the information furnished us by the Foreign Office is identical with that furnished the Military Attaché by the War Office.

Repeated to Peiping.