Office of the Historian

793.94/13567: Telegram

The Ambassador in Japan (Grew) to the Secretary of State25

Tokyo, July 27, 1938—3 p.m.
[Received July 27—10:05 a.m.]

494. Following is a general digest of a long conversation with the British Ambassador yesterday.

1.
The Ambassador, on returning from the mountains for 2 days in Tokyo, said that he wished to tell me of his plan for a talk with the Minister for Foreign Affairs yesterday afternoon. The British Government feels that the time has come when it must examine its future policy toward Japan in connection with the situation in China. It must ascertain whether any confidence can be placed in Japanese assurances of the intention and desire to respect British interests without discrimination in China or whether the Japanese propose progressively to crowd British interests out of China. Great Britain must reach a [Page 240] decision as to whether she can in future cooperate with Japan or whether she must throw her full weight behind the Chinese Central Government. Sir Robert Craigie therefore proposed to present to General Ugaki a list of some of the principal British desiderata and to discuss the situation along general lines.
2.
The Ambassador said that he proposed to tell the Foreign Minister that Japan was going to face great difficulties in the process of consolidation and reconstruction in China even after complete military victory and that at that time Japan would stand greatly in need of foreign financial cooperation.
3.
There then arises the question of sanctions in case the British representations lead to no favorable results. Craigie asked me if I had been informed of a recent approach to our Government by the British Government to ascertain whether we would consider some kind of financial support of the Chinese Central Government in the form of loans or credits. I replied that I had not been informed thereof. The Ambassador said that an unfavorable reply to the British inquiry had been given by the American Government on the ground that such a sanction as the British Government proposed would not accord with American policy and that there were other methods which the American Government would prefer to follow. Craigie asked me if I knew what methods my Government had in mind to which I replied in the negative.
4.
Craigie realized that the position of our Government with respect to foreign financing was somewhat different from that of the British Government but he felt strongly that if it could become known in Japan that unless the Japanese respect our respective interests in China Japan could hope for no financial support either from American or British sources during the period of reconstruction the effect would be important and salutary. (In this connection I have constantly in mind Department’s 338, December 10, 7 p.m., 1943).26
5.
Craigie informs me today that his interview with the Foreign Minister yesterday followed the lines which he had sketched to me and that nothing particularly new emerged. Sir Robert nevertheless received the impression that in spite of the difficulties and especially the opposition of the Japanese authorities in China, genuine efforts are being made in Tokyo to comply with British requirements.
6.
The partial list of British desiderata as presented to the Foreign Minister follows:

[“] Northern district of Shanghai.

(a)
Modification of pass system in the northern district for employees of British firms and for removal of British owned goods. Application in all such cases to be made by His Majesty’s Consulate [Page 241] General to the Japanese Consulate General without necessity for reference to any other Japanese authorities.
(b)
Resumption of normal municipal activities by Shanghai Municipal Council in return for which the Council will be prepared to take next step along agreed lines towards reconstitution of Japanese branch of the police force.
(c)
Resumption of bus and tram service.

Navigation of Yangtze.

Permission for two British vessels per week to navigate the Yangtze up to Wuhu. (It would be understood that full guarantees could be given and no Chinese passengers carried.)

Removal of restrictions on the following British owned or controlled concerns:

(a)
Immediate reopening of Zoongsing mill.
(b)
Cessation of interference with Chunta mill.
(c)
Evacuation of Sungsing number 7 mill and its return to control of the Hong Kong and Shanghai Bank to which it is mortgaged.

Railways.

Grant of inspection facilities for nominees of the British Chinese Corporation of those railways which are not now the scene of major military operations. (See British Embassy memorandum of 20th April, 193827 regarding the Shanghai-Nanking and Shanghai–Hangchow–Nippon [Nanchang?] Railways.)

Whangpoo Conservancy.

Removal of all restrictions on conservancy work in the Whangpoo River under the authority of the International Consultative Board”.

Paragraphs numbered 1, 2, 5 and 6 repeated to Shanghai for Hankow.

Grew
  1. In its telegram No. 447, August 13, 2 p.m., the Department repeated the substance of this telegram to the Embassy in the United Kingdom.↩
  2. Foreign Relations, 1937, vol. iii, p. 785.↩
  3. Not found in Department files.↩