893.102 Tientsin/273: Telegram

The Chargé in Japan (Dooman) to the Secretary of State

284. Our 274, June 15, 5 p.m.

During my interview this afternoon with the Minister for Foreign Affairs, he asked me what view I took of the Tientsin situation. I replied that in my opinion, the situation might become one of grave risk to all concerned; that the question of maintaining federated reserve currency is at the root of the trouble; and that the extremists among the Japanese military are seeking to eliminate the British Concession as a refuge for national currency, the continued circulation of which in North China offers an effective obstacle to the success of the Japanese currency scheme. The Foreign Minister concurred and said “this situation is going to become worse.” He asked whether the United States would become involved. I replied that the American Government is concerned over the difficulties which have arisen between the British and the Japanese over questions arising within the British Concession and hopes that they can be speedily solved, but that I could not indicate what its attitude would be if there arose that more serious situation which the Foreign Minister himself envisaged. I added that I assumed he did not expect that the American Government would assist the Japanese military in establishing their currency in North China to the prejudice of the interests of all except the Japanese. The Foreign Minister smiled and said “all we hope is that the United States will not become involved.” He went on to say that the British hold the key to a satisfactory settlement by so amending their Order in Council of 1935 as to permit British banks to deal in federated reserve currency.
3. [2?]
This conversation was understood by Mr. Arita and me to be informal and off the record.