693.94244/45
The Consul General at Shanghai (Gauss) to the Ambassador in China (Johnson)65
Sir: I have the honor to enclose, for the confidential information of the Embassy, a copy of a memorandum of conversation66 which took place at Shanghai on April 27, 1936, between Mr. K. Wakasugi, Counselor of the Japanese Embassy, and Mr. H. J. Timperley, correspondent for the Manchester Guardian.
It will be noted that during the course of a discussion regarding smuggling in North China, and the Japanese attitude thereto, Mr. Wakasugi made the interesting statement that “We are not doing anything to help the Customs people, nor are we doing anything to help the smugglers”, and that he added significantly “We would be glad to cooperate with the Chinese in suppressing the smuggling but first of all they must meet our terms.” In response to Mr. Timperley’s inquiry as to the nature of such terms Mr. Wakasugi stated that in the first place China would have to lower the Customs duties on the principal articles being smuggled. Mr. Timperley adduces from this statement, and probably not illogically, that the Japanese contemplate using China’s anxiety concerning the serious loss of revenue resulting [Page 137] from smuggling in North China and elsewhere as a lever to force a reduction in tariff rates on certain Japanese commodities.
Mr. Wakasugi’s belief that Japan’s policy vis-à-vis China will probably not be definitely formulated until after the Extraordinary Session of the Diet, which convenes in May, is of particular interest and is at variance with the recent statements attributed to Mr. Arita, the Japanese Minister for Foreign Affairs, and to Colonel Kita, the newly appointed Japanese Military Attaché, whose pronouncements have given the impression that there exists at the present time a coordinated and definite policy.
As regards the general situation in China, Mr. Wakasugi appears to be “optimistic” and believes that so long as Japan does not “press for something which impairs Chinese sovereign rights” there can be no outbreak of hostilities between the two countries because “The Chinese will have nothing to fight about.” He added significantly, “After all it is up to us.” This appears to be a very shrewd estimate of the point to which Japanese aggression may be carried with impunity and is possibly indicative of a general attitude in Japanese diplomatic circles that the essentials of Japan’s program can and should be effected without a technical breach of China’s sovereignty.
Respectfully yours,