894.00/799: Telegram

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

422. Department’s 212, June 25, 4 p.m., paragraph 2. I learn on completely reliable authority that Ikeda is determined that the “China Organ” and the two companies mentioned shall not follow the Manchurian pattern by excluding non-Japanese enterprise from the occupied areas of North and Central China. He has stated categorically in privacy that the reconstruction of China without foreign cooperation would be impossible and that he will insist upon observance of the principle of the Open Door. It is for this very reason that the effort is being made to take these matters out of the hands of the army.

Likewise Kodama, who has been appointed to head the Central China Promotion Company, states privately but categorically that he shares Ikeda’s views and that as his opinions are well known his selection would have been impossible if the Government had intended to institute a monopolistic system.

Naturally I am disinclined to accept such assurances at their face value but the wind appears at least to be blowing in the right direction. I shall discuss this subject with the Minister for Foreign Affairs.

Repeated to Shanghai for Hankow.