Foreign Relations of the United States Diplomatic Papers, 1938, The Far East, Volume III

894.00/797: Telegram

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

Washington, June 25, 1938—4 p.m.

212. Your 399, June 22, noon.

1. The Department finds your estimate of Cabinet developments and attitude very helpful, approves the course which you have pursued, and favors the procedure which you have in contemplation.

2. Careful note has been made of your observations, especially those in regard to the conditions under which Ugaki and Ikeda accepted office. The Department notes with concern, however, that in the establishment of the “China Organ” and the setting up of the North China Development Company and the Central China Promotion Company, the Japanese are closely following the formula developed in Manchuria. In this connection attention is invited to pages 12, 13 and the last paragraph of page 16 of Harbin’s despatch 569, October 22, 1937,⁷³ entitled “The Trend of Events in Manchuria since September 18, 1931”. The “China Organ” appears to be patterned after the “Manchuria Affairs Board”, and the account of the organization and purposes of the two special companies mentioned, as given in your despatch No. 2950, May 25, 1938,⁷³ indicates that these companies closely resemble the special companies in Manchuria which occupy a preferred status and which in practice operate to exclude non-Japanese enterprise from that area.

3. As general background for your proposed conversation with the Japanese Minister for Foreign Affairs the Department suggests that you re-read Department’s telegram 187, September 2, 2 p.m., 1937;⁷⁴ my National Press Club address⁷⁵ (see Radio Bulletin 62, March 16, 1938); and my Nashville address⁷⁶ (see Radio Bulletin 128, June 2, 1938). As I indicated in these, public opinion in the United States deplores the fact and the circumstances of the present conflict in China and has become increasingly critical of Japan; this Government looks with disapproval upon the present manifestation of Japan’s foreign policy and the methods which Japanese armed forces are employing in pursuit thereof; the widespread bombing of civilian populations in China has shocked both our people and the Government not only on grounds of humanity but also on grounds of the menace to American lives and property; and this Government is deeply desirous that the hostilities be concluded and peace be restored as soon as possible along lines consistent with the provisions of existing international commitments and with principles of equity and justice in relation to all concerned, and with due regard for the establishment and maintenance of orderly processes in the relations of nations. The concern of this country is, as set forth in the documents cited, broad and fundamental. It transcends in importance specific desiderata which, however, have a proper place in the broad field of American interest in and concern regarding China.

4. Certain specific desiderata are outlined below:

(a) Maintenance of the personal rights of American citizens.⁷⁷ This calls for exercise of care by Japanese armed forces to avoid injury to American citizens through direct military activities; precaution by Japanese authorities against molestation and affront to American citizens by members of the Japanese armed forces; and assured enjoyment by American citizens of their right to visit and control their properties and goods and to resume their lawful occupations in Japanese-controlled areas wherein hostilities have ceased.

(b) Maintenance of equality of opportunity in Japanese-controlled areas as between Japanese ana others⁷⁸ in conformity with the situation which existed prior to the occupation of those areas by Japanese armed forces. Effectuation of this desideratum calls for avoidance of such restrictions upon and obstacles to American enterprise and trade as would result from establishing of “special” companies with official support and preferred status, from granting of monopolies to officially-operated or controlled companies or others, and from establishing of exchange control with accompanying restrictions upon trade between China and the United States while at the same time permitting the free movement of goods and funds between China and Japan. In short, the restrictions upon American enterprise and trade resulting from the situation in Manchuria and from the relations between that area and Japan afford an illustration of what we desire not to have occur in other parts of China.

(c) Respect for American property rights. This desideratum includes the exercise of care by Japanese armed forces to avoid damaging American properties by direct military activities, especially through bombing by planes; restoration to American citizens of the full possession and unmolested use of their properties in Japanese-controlled areas wherein hostilities have ceased; and prompt compensation for damage and loss caused by Japanese military operations in China.

(d) Respect for legitimate American financial interests. This desideratum includes preservation of the administrative machinery of the Chinese Maritime Customs⁷⁹ and continued servicing of American-held obligations secured upon customs, salt and consolidated tax revenues.

(e) Abstention from interference with American treaty and prescriptive rights in China. This desideratum includes non-interference with American extraterritorial and other rights growing out of American-Chinese treaties; and abstention from interference with the organization and administrative functions of the International Settlement at Shanghai and with the organization and functions of the Chinese courts serving the International Settlement.

5. The foregoing is suggestive and the Department would wish you to exercise your discretion with regard to supplementing or modifying the suggestions outlined above. You may consider it advisable to mention illustrative examples such as the continued occupation by Japanese of the University of Shanghai property at Shanghai, the continued detention at Nanking of a large shipment of American wood oil, and the recent slapping by Japanese soldiers of an American citizen at Nanking and of one at Tsingtao. The Department believes it advisable that in your discussion with the Minister for Foreign Affairs you endeavor to prevent there arising an impression that this Government’s concern relates only to concrete and tangible issues inherent in matters such as are mentioned among the various desiderata. It would seem desirable that you especially endeavor to cause the Minister for Foreign Affairs to appreciate and understand also the character of the interest and concern emphasized in paragraph 3 of this telegram.

6. You will, of course, use your own judgment as to the moment when it may be opportune to make the contemplated approach. The Department suggests, however, that if practicable it might be advisable for you to telegraph short advance notice of your intention to proceed, so that in the event of any development here which might make the moment inopportune, the Department could so indicate to you.

Hull

73. Not printed.
73. Not printed.
74. Foreign Relations, 1937, vol. iii, p. 505.
75. Foreign Relations, Japan, 1931–1941, vol. i, p. 452.
76. Department of State, Press Releases, June 4, 1938, pp. 645, 646.
77. See also vol. iv, pp. 214 ff.
78. See also ibid., pp. 1 ff.
79. See also pp. 626 ff.