500.A15A5/184: Telegram

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

201. My 200 September 11, noon. The following text of a letter which Yoshida addressed to me yesterday on Foreign Office stationery is cabled as possibly significant:

“Following to our conversation of yesterday, I should like to add certain remarks which Mr. Hirota said and which I thought better to leave to your direct conversation with him. Our Navy, he said, strongly oppose the ratio system and limitation of shipbuilding on category. At the same time, it has been in a position in which it is forced to accept a fair and adequate disarmament. Difficulties are how to make a formula on the line of the idea.

As I said, one cannot be too optimistic, nor, of [sic] too pessimistic.

It is extremely unfortunate Tokyo newspapers, magnifying matters, mislead the public to extreme and create a disagreeable atmosphere. I hope our Minister’s inspiring efforts and cooperation with him of the foreign representatives, particularly yours, dear Ambassador, will finally bring out a happy result.”

The Embassy interpretation of the third sentence in Yoshida’s letter, which seems to me significant, is as follows:

The Navy cannot reasonably expect to receive progressive increase in funds for building purposes. The naval appropriations for last year were approximately one-third of the normal national revenues. This year the Navy has asked for over 200,000,000 yen more than last year’s naval budget (714,000,000 as against 487,000,000 appropriated last year or almost one-half of the normal revenue of the country). Notwithstanding the unusually large expenditures already, only approximately one-half of the building programs have been completed. For Japan to continue such a large outlay for auxiliary vessels and in addition to embark on a capital ship replacement program not envisaged in the present estimates but which might be necessary after 1936 would apparently be beyond the capacity of the national finances and the naval authorities may, therefore, be forced to compromise, especially if some method can be devised to solve the problem of ratios which has become a national issue of prime importance.

Repeated to Peiping by mail.