893.6363 Manchuria/189: Telegram
The Secretary of State to the Ambassador in Japan (Grew)
72. Standard-Vacuum Company requests that following message (paraphrased by Department) be transmitted to its senior representative in Japan:
“Reference our cable April 24 and Parker’s cable April 26. In view of your decision, of which we and Washington approve, to follow [Page 910] principle of salvaging our investment as much as possible by an offer by us of sale to the monopoly, it is our opinion that process of salvage should also include stocks and that computation of good will should be based on a percentage, including value of stocks, of total investment. We do not believe that inclusion of stocks in your offer under conditions of force majeure would in any way conflict with our general policy of avoiding dealing with monopolies. We feel that to base a claim for good will on a profit basis would not be wise because it may ultimately become necessary to defend the basis of calculation of a lump sum proposal and if good will represents a large figure it would be used in justification of monopolies, would react to our detriment in other countries, and would accentuate our tax problems. For ultimate satisfaction of our claim we agree that we should continue to look to Japan but only when there has been established a definite claim. That there is a distinction between an offer and a claim and that your offer to sell the physical assets to the monopoly will only in the event of a merely partial or unsatisfactory settlement become a claim should be borne in mind. This applies also to good will and other items.
Washington feels, and we concur, that in view of diplomatic and treaty background it would not be expedient for Embassy to file a copy of our offer to the monopoly with the Japanese Government. If Manchuria authorities reject our offer or accept it only in part and it later becomes necessary to file a claim, Washington will be in a much better position to assist than if Embassy acts on your proposal that it now file with Japanese Government a copy of your offer.
Results of further conference with Washington are indicated above.
We leave to your discretion settlement of dismissal allowances.
We will communicate with Parker at Honolulu and for obvious reasons strongly advise against relaying this message to him.
Embassy is being instructed by Washington. Dundas.”
Department’s instructions follow.99
- Infra.↩