861.77 Chinese Eastern (Loan) 1932/8: Telegram
The Ambassador in France (Edge) to the Secretary of State
[Received 12:20 p.m.]
519. Your 315, September 6, 3 p.m.45 It appears to be accurate that the Albert Kahn private bank which since 1898 has served as fiscal agent for the Japanese Government in France, has been attempting for the last 6 months to obtain $50,000,000 credit in Paris for the account of Japan. These negotiations have come to nothing thus far and the Bank de Paris et des Pays Bas is still said to be considering the matter with the bonds of the Chinese Eastern Railway as a possible but not probable quid pro quo.
At the Foreign Office Leger stated that the French Government knew nothing of any such negotiation except that the rumor of it has been put abroad at different times for the last year largely by the Kahn Bank, a very small unimportant organization without great financial resources. He said that assuredly if any bank of consequence were interesting itself in such a proposal it would come to their attention where it would meet with discouragement.
He said that the attitude of France with reference to Japan and Manchuria remained entirely unchanged. He said that France had been in agreement with the American attitude on this question for several reasons. (First) because it concorded entirely with the bases of their foreign policy, namely, the inviolability of treaties and (second) the fundamental rights of states as members of the League of Nations. Thus he said on legal and on moral grounds France sympathized with China. However, in addition to these considerations the interest of France as between China and Japan lay preponderantly in China and the fact that China was a neighboring state to certain of the French colonies made it additionally important for France not to provoke hostility in China or induce any reaction there that might be felt on the French frontiers. It was likewise true that France had no desire to bring on difficulties with Russia by any attempts to assume responsibilities in the Manchurian region. He was deeply disturbed by the possible repercussions of the Lytton report to the League and in particular on the disarmament question as it had been complicated by the German insistence on equality of treatment. He said that the [Page 235] combination of these elements endangered not only the cause of disarmament by [but?] as well any economic readjustments that might be expected out of the forthcoming conference.
In this connection James G. McDonald of the Foreign Policy Association had a talk the day before yesterday afternoon with Herriot the tenor of which was much the same as the conversation with Leger. Herriot had been studying your speech of August 8 with attention and apparently intends to put forth the question in a further effort to educate French public opinion on the implications and repercussions of the Manchurian affair in his speech next Sunday. He said that he felt he understood the American attitude fully and the interest which France had in supporting it but that the whole problem was not well comprehended in this country. He said that he likewise realized that the Japanese were a proud people suffering grave internal difficulties between a militaristic group on the one hand and the dangers of communism on the other. Therefore, he hoped that there would be some way of preventing the two Governments bringing about a definite break at Geneva. McDonald informed me that when he was discussing this question with Von Biilow in Berlin, Biilow told him that he had discussed most tentatively with the German Ambassador, who was just returning to Tokyo, the possibility that the contents of the Lytton report should be made known in confidence to a group of powers in advance of its public presentation in Geneva in order that the Japanese might have a chance to prepare their reply to it which should begin by accepting the report as a basis for discussion. This was a purely tentative idea of Von Biilow which he expressed to McDonald.
Reed46 and I have an engagement with Herriot tomorrow and will informally review all these topics.
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