The Ambassador in Japan ( Grew ) to the Secretary of State
[Received November 19—8:15 a.m.]
741. Our 734, November 16, 10 p.m. In further conversation today with my British colleague I asked him whether he believed there was any truth in the rumors published in Japan that his Government was now considering a re-orientation of policy looking towards the development of Anglo-Japanese collaboration in China instead of further supporting the Chinese National Government. Craigie replied emphatically in the negative. I asked him whether he thought there was likelihood of a British loan to support the Chinese currency as proposed by Chiang Kai Shek to the British Ambassador. Craigie said he knew of no present concrete developments in that connection but that the present trend of thought in London leaned towards the building of the railway from Lashio in Burma into Yunnan and Szechuan which he thought would be financed by various members of the old consortium. He said that this was a long term policy and that while overt plans in that direction would at first cause a bitter [Page 387] outcry from Japan the building of the railway would in due course give Great Britain, France and such powers as might participate an important leverage in their relations with Japan. He, however, told me in strict secrecy that from the purely strategic point of view a good many British military authorities are opposed to the construction of such a railway because in certain contingencies it might be captured by the Japanese and used for an invasion of Burma. Craigie believes, however, that some further concrete step in support of Chiang Kai Shek will soon have to be taken by Great Britain if they wish to avoid his being driven into the Japanese camp.