861.77 Chinese Eastern/1310: Telegram
The Ambassador in Japan (Grew) to the Secretary of State
[Received May 1—8:45 a.m.]
85. In a long conversation today with the Soviet Ambassador he said that the resumed negotiations for the sale of the Chinese Eastern Railway had already failed. The delegates of Manchukuo had made an unimportant concession in the amount to be paid for the railway which he had cabled to Moscow and had already received reply to the effect that the new proposition was not satisfactory to the Soviet Government. He said that he would communicate this reply to the Minister for Foreign Affairs within a few days and he felt that at that time the relations between the two countries would become further strained. He said that he does not expect that war between the two countries will break out this year because the Japanese are not at present adequately prepared. Further report by mail. Repeated to Peiping.