893.515/1100
Memorandum by the Chief of the Division of Far Eastern Affairs (Hornbeck)
| Conversation: | The Secretary of the Treasury, Henry Morgenthau, Jr. |
| Mr. Yutaro Tomita, Financial Commissioner of the Japanese Government and Financial Attaché of the Japanese Embassies at Washington, London and Paris. | |
| Present: The Japanese Ambassador, Mr. Hirosi Saito. | |
| Mr. Harukage Ukawa, Assistant Financial Attaché of Japanese Embassy, Washington. | |
| Mr. Hornbeck. |
. . . . . . . . . . . . . .
Mr. Tomita said that, before Sir Frederick Leith-Ross went to China, he had talked with Reith-Ross. As an aside, he remarked that he, Tomita, had been in charge of Japan’s financial relations with China for a period of twenty years. He said that Leith-Ross had said that China might pursue a financial course such as has been followed in “Manchukuo”. He, Tomita, had told Leith-Ross that this was not possible, as the situations were different: that in Manchuria there was a strong central bank which Japan had backed and with which Japanese banks cooperated; that in China there was no such [Page 478] situation. Nevertheless, he said, the Chinese had tried to proceed on the line which had been followed in Manchuria; and, he remarked, the attempt at monetary reform in China was not proving successful. It looked to be successful in the neighborhood of Shanghai, but in other regions, especially in the interior, such was not the case. “Shanghai currency” did not circulate in the interior. Mr. Morgenthau suggested that it was “Nanking currency”. Mr. Tomita said that “Nanking currency” was in fact Shanghai currency, and he repeated that the monetary reform was not succeeding. Mr. Morgenthau said that in his opinion it had gotten on remarkably well, considering the short time—since November 4, 1935—that it had been under way. He pointed out that the banks of other countries had turned in their silver—with the exception of the Japanese banks. Mr. Tomita said that the Japanese banks had not turned their silver in because they were convinced that the monetary reform would not succeed. Mr. Morgenthau remarked that the Japanese banks are holding out about $10,000,000. Mr. Tomita turned to the Japanese Ambassador and said: “They have not made up their minds”.
At that point the Japanese Ambassador indicated that he thought it was time to bring the call to an end.
There followed the usual exchange of courtesies and departure of the Japanese guests.
Mr. Morgenthau held Mr. Hornbeck back. He requested that Mr. Hornbeck make a memorandum of the conversation. He asked for Mr. Hornbeck’s opinion of the interview. Mr. Hornbeck said that he thought that Mr. Morgenthau had said just those things which would produce the to-be-desired impression; that he had brought out in vigorous relief the strength of our public financial situation and position. Mr. Morgenthau remarked that he had had to “give it to” Mr. Tomita on the matter of the Chinese monetary reform. Mr. Hornbeck replied that such was the case but that Mr. Tomita “had asked for it” and that it was well for him to have been given the clear indication that the sympathy of the Secretary of the Treasury of the American Government is with the Chinese in their effort at monetary reform and that we look with disfavor on Japan’s placing of obstacles.
Mr. Morgenthau said that he had told the Chinese bankers of Mr. Tomita’s impending appearance in Washington and that the Chinese bankers had pressed him yesterday for a commitment, which he had refused to make. He said that they were apparently nervous over Tomita’s approach. Mr. Hornbeck told Mr. Morgenthau the story of the arrival of Tang Shao-yi and the signing of the Root–Takahira Agreement—in 1908.31
[Page 479]There followed some discussion of the purpose of Tomita’s visit to Washington. This visit may have been timed deliberately to take place while the Chinese bankers are here; but Mr. Tomita apparently has no message to deliver on behalf of his Government and no proposals to make; he may desire to make a certain impression through the publicity which may be given in the Far East to the fact of his being here and making certain calls at this moment; he is on his way home from London to Tokyo; he is here for two days only; he of course desires to be able to say at home that he has made contacts with high officials here, and he of course desires to pick up any information which may be of use to him either from a technical or from a political point of view. (Note: In the earlier stages of the conversation, the Japanese Ambassador remarked that Mr. Tomita had been talked of as a possible head for the Ministry of Commerce and Industry.) Mr. Morgenthau asked for Mr. Hornbeck’s opinion in regard to his having held this interview at his home rather than at his office. Mr. Hornbeck said that he felt that it had been very good strategy; he felt that the Japanese would feel that special courtesies had been shown them, and, at the same time, publicity would be avoided.
(Note: At one point in the conversation—while the question of balancing the United States budget was under reference—, Mr. Morgenthau made the observation that in Japan about one-half of the Japanese Government’s expenditures goes to military matters.)
- For exchange of notes at Washington, November 30, 1908, see Foreign Relations, 1908, pp. 510–512.↩