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

No. 2268

Sir: In continuation of the Embassy’s despatch No. 2241, February 1, 1937,12 I have the honor to report political developments from February 1 to February 16 connected with the formation of a cabinet by General Hayashi.

General Hayashi’s efforts to form a cabinet began on January 30, and on February 2 the Cabinet was installed in office although not entirely complete. By February 10 the Cabinet was as follows:

  • Premier and Foreign Minister, General Senjuro Hayashi.
  • Minister of Education, General Hayashi (concurrently).
  • Minister of Overseas Affairs, General Hayashi (concurrently).
  • War Minister, General Gen Sugiyama.
  • Navy Minister, Admiral Mitsumasa Yonai.
  • Minister of Finance, Mr. Toyotaro Yuki.
  • Minister of Home Affairs, Mr. Kakichi Kawarada.
  • Minister of Justice, Mr. Suehiko Shiono.
  • Minister of Communications, Count Hideo Kodama.
  • Minister of Agriculture and Forestry, Mr. Tatsunosuke Yamasaki.
  • Minister of Commerce and Industry, Admiral Tatsuo Godo.
  • Minister of Railways, Admiral Godo (concurrently).

These appointees are without party affiliations. Of this Cabinet the outstanding figure is Mr. Yuki, Minister of Finance. Mr. Yuki is a banker of long experience, a man of great force, and an effective leader. Biographical information on each member of the new cabinet is being submitted in the usual form, without covering despatch, by the same pouch by which this despatch is forwarded.

The first statement of policy by the Hayashi Cabinet was the grandiloquent declaration of five principles commented upon by the Embassy’s despatch No. 2256 of February 15, 1937.12 The second important statement was contained in the Premier’s speech of February 15 (Embassy’s telegram No. 57, February 15, 6 p.m.13) to the Diet, which had until then been continuously prorogued to permit the new government to prepare measures (including the budget) to [Page 711] submit for consideration. The speech showed a desire for harmonious relations with the Diet, announced that the Cabinet would submit a budget ¥270,000,000 less than that put forward by the Hirota Cabinet before its resignation, was firm in tone concerning relations with the Soviet Union (with regard to which the timeliness of the agreement with Germany against communism was affirmed), and contained a brief friendly statement about relations with the United States. A news report of Premier Hayashi’s speech is enclosed.14

The present budget for 1937–1938 is in the sum of ¥2,770,000,000, which is still 19% higher than the budget for 1936–1937; but the Hirota budget called for 30% more than did the 1936–1937 budget. The saving in comparison with the Hirota budget is not at the expense of military appropriations, with the exception of one military item of ¥23,000,000 which is simply deferred until the following year.

The reception accorded by the Diet to the Hayashi Cabinet has been in the main friendly and smooth, but on February 16 interpellations in the Lower House were adversely critical of participation in politics by the military. Although the debate did not get out of hand it is reported by the press to have given serious concern to army leaders.

So much for a brief statement of the externals of Cabinet developments during the period under review. What was going on behind the scenes? Piecing together the narrative from the best information available at the present time, the Embassy submits the following interpretation.

When Ugaki’s efforts to form a cabinet were blocked, it was the Army and solely the Army which was responsible for the failure. All other important groups in the country favored Ugaki. To say that the Army was unitedly against Ugaki, however, would give a false impression. Both Terauchi and Sugiyama are personally friendly to Ugaki, but it was utterly impossible for them to assist in the formation of an Ugaki cabinet because of one group within the Army which is bitterly opposed to Ugaki. Although it is impossible to say that the entire Japanese Army stands for such and such, this one group is known to be homogeneous, well defined, and clear in its program. The group is the Kwantung Army faction, the leader of which is Lieutenant-General Seishiro Itagaki, Chief of Staff of the Kwantung Army. The Itagaki group believes that Japan must take Mongolia by a war against the Soviet Union; it insists upon rapidly mounting military appropriations in preparation therefor; it favors state socialism as launched in Manchuria; it anticipates changes in Japan modelled after the new régime in Manchuria; it backs the agreement with Germany against communism;15 and it believes in circumscribing politics by the building up of a monopoly party, under Army inspiration, of [Page 712] the fascist type. It is the group within the Army of definite political ideas and definite political danger.

To the Itagaki group Ugaki as Premier was completely beyond acceptance. The choice fell on Hayashi as a moderate soldier without political ideas, and the Itagaki group consented to that choice because in the last years Hayashi has had the good sense to confine himself to military affairs rather than to politics. By this principle he has avoided offending the Itagaki group, although not himself one of them. But Hayashi has been in various important positions since serving as assistant to Araki and of course realizes the strength of the Itagaki group. This realization, as well as Hayashi’s shortcomings in political intuition, was immediately revealed by Hayashi’s proposing Itagaki as his War Minister and Suetsugu16 as his Navy Minister.

If, in the face of the Diet attack of January 21 on the Army, Hayashi had gone ahead with his desire to place Itagaki and Suetsugu in his Cabinet, the result would have been a political upheaval unparalleled in Japan in many years. Saner advisers to Hayashi, who have followed the trend of public opinion, were able to stop this mistake. In checking this short-sighted scheme of Hayashi’s the Navy played an important part. When asked to allow Suetsugu to serve, the Navy put forward Admiral Yonai who is by all odds the biggest man in the Japanese Navy, the Togo of the present generation, a moderate, and opposed to the active program of direction of the nation’s affairs by the Army. So high is Yonai’s standing that it was impossible for Hayashi to refuse the generous gesture of the Navy in offering his services as Navy Minister.

Hayashi’s desire to have Itagaki as War Minister suffered a similar fate. The moderate “Big Three” of the Army (Sugiyama, Terauchi, Umezu17) balked absolutely. When Sugiyama himself was offered the position of War Minister with Itagaki as Vice Minister again Hayashi was voted down. The compromise reached was the choice of Nakamura, a nondescript moderate, who was succeeded after a week’s time by Sugiyama; but by Sugiyama with Umezu as Vice Minister, not Itagaki. A man named Sogo, a follower of the Itagaki group, had acted as adviser to Hayashi in the organizing of the cabinet, and had pushed the Itagaki–Suetsugu panel. When calmer heads won the day Sogo withdrew from the scene in disgust and has taken up duty at Tientsin in an enterprise which the Kwantung Army is interested in developing.

Superficially the Itagaki group has been excluded from the present Government, but the importance of this exclusion should not be misinterpreted. [Page 713] Hayashi is a compromise called for by the etiquette of Far Eastern political psychology, but he is not a serious handicap to the further development of the aims of the Itagaki group. The Itagaki group definitely anticipates war with the Soviet Union and is insistent on increased appropriations to pave the way. Hayashi is not committed to war but nevertheless believes in larger military appropriations and will doubtless succeed in getting them. His very limitations as a political thinker make him a Premier not unwelcome to those men in the Army who have very definite political ideas for Japan’s future.

A compromise choice, Hayashi made his first announcement of policy in the form of five non-committal principles which might be interpreted by opposing factions at will. Dependent on the Diet’s approval of a budget making large appropriations to the military, he has been forced to go to the Diet in as friendly an attitude as possible. There is no reason to suppose that Hayashi has any special leaning to constitutional politics. He is simply a soldier and because he desires appropriations he is approaching the problem in the smoothest manner he knows.

It should not be supposed that the Itagaki group has been shunted off by the developments of the last month. In an important respect that faction of the Army has been awakened to new effort. An Itagaki controlled cabinet has been prevented, and it has been prevented because of fear of the Diet and the Diet’s influence on public opinion. This failure has pointed with great force to the need for pushing another side of the Itagaki program: the development of a monopoly political party to control the Diet and to permit constitutional politics to operate in a manner which the Army conceives to be of the nature of state structure peculiar to Japan, but which in actuality would probably be not far different from the Nazi party system in Germany or the Fascist party system in Italy.

For this purpose the Army has at hand the nucleus of an organization which simply requires expansion. Under the leadership of Lieutenant-General Yoshitsugu Tatekawa, retired, with the cooperation of other retired officers (Colonel Kingoro Hashimoto, Colonel Junichiro Kobayashi, Vice Admiral Shozaburo Kobayashi) there was held on November 15, 1936, a conference of military organization leaders to discuss the formation of a party temporarily called the “restoration” party. Making use of already existing patriotic societies and reactionary organizations, this movement has already shown great activity and will probably be developed further by the Army in the present political contingency. The lessons to be derived from the monopoly parties so effectively employed by Hitler and Mussolini have not been without a hearing among army men in Japan. Already [Page 714] in Manchuria, where the Kwantung Army is able to try out its political philosophy, the Concordia party is carrying into execution political ideas which are undoubtedly entertained by the Army for Japan itself.

What can be expected for the future? During the last two months the people, sensitive (like others of the human race) in the region of the purse-string, stunned by a request for approval of a budget thirty percent larger than the last because of military demands, gathered their voice in protest. The government fell. Effort to form a cabinet favored by the entire civilian population was blocked by the Army, and a military cabinet, though a moderate one, has been installed. It presents a slightly smaller budget but with the same increased military expenditures. Because of the necessity of having the budget passed, its attitude toward the Diet is friendly and conciliatory. But, under the surface, back of this stop-gap cabinet, something else is going on. The Army has learned its lesson. Under the present organization of party politics the Diet can be troublesome. The Army must work through the Diet also. The next move is the active development of a single dominating Army-inspired party to control the Diet. Concentrated effort in this direction may confidently be expected. At present it remains the only point of vulnerability in the program of the military bureaucracy. In this connection reference is made to the Embassy’s despatch No. 2273, dated February 18, 1937.19

Respectfully yours,

Joseph C. Grew
  1. Not printed.
  2. Not printed.
  3. Vol. iii, p. 25.
  4. Not reprinted.
  5. Dated November 25, 1936; see Foreign Relations, 1936, vol. i, pp. 390 ff.
  6. Admiral Nobumasa Suetsugu, formerly Commander in Chief of the Japanese Fleet.
  7. Gen. Yoshijiro Umezu, who signed the Tangku Truce, May 31, 1933.
  8. Not printed.