Office of the Historian

693.002/437: Telegram

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

Tokyo, December 31, 1937—7 p.m.
[Received December 31—2:25 p.m.]

699. Department’s 383, December 29, 5 p.m.

1.
The matter has been fully discussed with my British colleague. He made it quite clear that the “negotiations” now taking place at Shanghai which he believes should be “transferred” to Tokyo are the discussions that have been taking place between the Japanese Consul General and Gauss and Hall-Patch respectively.
2.
Craigie’s replies to the specific questions presented by the Department are:
(a)
The Chinese would not of course be represented in the discussions in Tokyo which have been suggested. Craigie maintains that the Chinese have not thus far participated in any conversations at Shanghai although naturally Lawford has been kept fully informed of developments.
(b)
Formal negotiations at Tokyo are not contemplated. (Craigie pointed out that discussions thus far at Shanghai have been such informal conversations only).
(c)
The British contemplate that only general principles governing an arrangement would be agreed upon, necessarily only between those governments participating in the discussions and the Japanese Government, and that an endeavor would later be made to persuade the Chinese to accept any understanding which might be reached.
3.
Craigie stressed the point that a change of venue from Shanghai to Tokyo of the discussions between representatives of the British and the American Governments on the one hand and of the Japanese Government on the other would not alter the present relation of the Chinese Government to these discussions. He said that the Japanese civil authorities at Shanghai are inclined to be uncompromising because they are directly under the influence of the Japanese military and that he believed that if the conversations were carried on in Tokyo the Japanese would display a less intransigeant attitude.
4.
The British Ambassador stated in reply to my question as to the general principles contemplated under the British proposals that the British Government was interested as we were in the preservation of the integrity of the Customs Administration and revenues and that they wanted to come to the best arrangement possible with the Japanese to insure the continued payment of the service of foreign loans, the foreign indemnities and customs expenses. He said that he felt it was equally to the interest of the Chinese Government that some such arrangement be made and pointed out that the whole Chinese credit structure is based upon the customs. He said that the British Government would endeavor to persuade the Chinese to accept the arrangement reached. He pointed out that with the establishment of the new Peiping Government further complications might be expected to arise but that they would have to be met as they arose.
5.
Whatever might be the term applied to the discussions between the Japanese authorities and Lawford it is my opinion that they must be suspended if the proposed conversations at Tokyo are to have any value. In my opinion the chances are not great that the Japanese Government will agree to direct its representatives in Shanghai to break off discussions with Lawford as a condition precedent to opening conversations in Tokyo. However, I share my British colleague’s [Page 915] opinion that less intransigeance on the part of the Japanese might be encountered in Tokyo than exists at present in Shanghai.

Repeated to Shanghai for Hankow.

Grew