Memorandum by the American Ambassador in Japan (Grew) of a Conversation With the Director of the American Bureau of the Japanese Ministry for Foreign Affairs (Terasaki)

Mr. Terasaki called on me by appointment this afternoon and said that he had come at the particular request of Mr. Matsuoka to report on his observations during his recent visit to China. He said that after several years abroad he had been very reluctant to leave home so soon again and that the travel, which had all been by air, was excessively strenuous, but that Mr. Matsuoka was determined to do everything in his power to settle, so far as possible, the outstanding difficulties in Japanese-American relations existing in China and he therefore desired a first-hand report from a member of his own staff.

Mr. Terasaki then said that he feared that what he would have to say might not be gratifying to me but that he could only report the situation as he had seen it. He had been in touch almost exclusively with Japanese authorities and had not made contact with our Embassy in Peiping, (the implication being that he had purposely avoided such contact.) He had, however, apparently been in touch with American officials in Shanghai, or at least was aware, as he said on [Page 902]his own initiative, that our Consulate General had been very helpful in its efforts to solve current difficulties. I spoke of the sympathetic attitude of his brother, Mr. Terasaki, in Peiping. Mr. Terasaki said that it might be a gauge of his earnest desire to improve Japanese-American relations that his brother was now going to Washington but he added that the transfer would be carried out with as little publicity as possible.

Mr. Terasaki then said that he was convinced of the desire of the Japanese military and other authorities in China to settle the various cases in which we had made complaint but he developed the usual thesis that these difficulties arose directly from the existence of hostilities in China and he emphasized particularly the currency and exchange difficulties due to the necessary circulation of military scrip. He touched only upon two individual cases, namely the case of the confiscation of the ship Estelle L. and the Universal Leaf Tobacco case. With regard to the Estelle L. he went into a long explanation concerning the alleged traffic in silk undertaken by that ship in contravention of the measures of blockade which had led to the trouble. As for the difficulties of the Universal Leaf Tobacco Company he said that the opinion of the authorities was that a settlement in this case would have been reached much sooner if it had been dealt with on the spot and if the negotiations had not been transferred to Tokyo. He added that this feeling on the part of the authorities in China applied to other cases as well.

Mr. Terasaki’s statement was labored and somewhat devious and his remarks contained nothing more specific than that recorded above.

When Mr. Terasaki had finished his statement I thanked him for coming to communicate to me his observations and I asked him to convey my thanks also to the Minister. In reply I said that of the two cases which he had touched upon, that of the Estelle L. could hardly be considered as fairly representative of the difficulties which American interests were encountering in China at the hands of the Japanese authorities. As for the Universal Leaf Tobacco Company I said that the negotiations had been transferred to Tokyo simply because it had been found utterly impossible to make headway on the spot and I referred to a further note which we had recently addressed to the Foreign Minister on that subject.84 I agreed with Mr. Terasaki that it was almost always preferable to solve these problems on the spot but experience had shown that in most cases progress towards such solutions was blocked by the intransigent attitude of the local authorities.

I then referred to his statement that the Japanese authorities in China desire to do everything possible to improve American-Japanese [Page 903]relations, yet the bombings of our missions were still continuing and from the concrete evidence which came to us there could not be the slightest doubt that many of these attacks on these missions were intentional. I said that I would be loath to characterize the Japanese aviators as so lacking in ordinary intelligence that they could by mistake swoop down on American missions, clearly marked by American flags and marked on maps submitted to the authorities and in the vicinity of no military objective, in perfect visibility, and not only to bomb these properties but then to return to observe the result and to machine gun them at an altitude of only a few hundred feet. I showed him another note which I was about to address to the Minister,85 the second or third within a few days, describing the bombing of another American mission, this time in Poyang. I said that these dastardly attacks rendered it impossible for us to believe that the Japanese authorities in China were endeavoring to avoid new incidents.

I then said that the currency question of which he had spoken was only one phase of a patent intention to drive American business and other interests completely out of China and that this was being done not only by exchange restrictions but by monopolies, traffic restrictions and by many other measures which had already wrecked American business interests built up in China through generations. It was all very well I said to ascribe these various measures to the existence of hostilities but from the concrete evidence available to us there was no room left for doubt as to the intention of the Japanese authorities to dig in permanently and to turn all such interests permanently into Japanese hands. We had continually been informed that these interferences would cease as soon as the hostilities ceased but no sane man could accept such assurances on the basis of the concrete evidence presented.

At the termination of my remarks there was merely an exchange of mutual expressions of a desire on the part of Mr. Terasaki and myself to do everything possible for an improvement in the relations between our two countries.

I then referred to an article in the Japan Times and Advertiser of February 6, describing various provisions of the new Defense Bill presented in the Diet, containing a statement that “under the law diplomats and persons of upper classes may be arrested. …86 If illegal steps are taken, it may cause international trouble.” I said that from the context of this statement several of my colleagues had expressed concern lest this provision should refer to foreign diplomats. Mr. Terasaki laughed loudly and said that of course it applied to Japanese diplomats only. I replied that it was then difficult to [Page 904]understand the inclusion of the phrase “if illegal steps are taken it may cause international trouble” and that I thought he would do well to examine this provision carefully and it was for that reason that I had brought it to his attention. He said that he would do so. The conversation thereupon terminated.

So far as American interests in China are concerned, little or nothing developed in the conversation which could be regarded as either helpful or hopeful.

J[oseph] C. G[rew]
  1. Not printed.
  2. Not printed.
  3. Omission indicated in the original memorandum.