The Ambassador in Japan (Grew) to the Secretary of State
[Received March 12—8:50 a.m.]
168. 1. The Netherlands Minister gave me today in the strictest confidence information with regard to recent developments in relations between his country and Japan which have come to his attention subsequent to the developments reported in my 120, February 15, 11 a.m.
2. Further study of the action of the Japanese Government in terminating the Treaty of Arbitration of 1933 had led to the conclusion that such action was not of itself politically significant and that the Japanese Government was exercising a right to propose changes in the treaty in view of certain conditions eventuating which had been anticipated when the treaty was signed. However, what was causing the Netherlands Government some concern was the fact that the Japanese Minister at The Hague, when calling on the Minister for Foreign Affairs on February 2 to present the notice of termination of the treaty, presented at the same time an aide-mémoire setting forth the view of the Japanese Government with regard to the adjustment of commercial relations between the two countries. It is General Pabst’s opinion, which I gather is shared by his Government, that the presentation of these two matters simultaneously to the Netherlands Government was not maladroit but was calculated and designed to produce an impression of Japanese determination to secure their privileges and in fact a preferred position in Dutch possessions.
3. General Pabst supplied me with a copy of the aide-mémoire, the text of which is being communicated to the Department in a separate telegram.15 It is composed of four sections: the first relating to commerce proposes that Japan and the Netherlands East Indies should each refrain from prohibiting or restricting the export and import of goods between the two countries; the second, relating to entry into Japan of employees of Netherlands firms and to the abolition or moderation by the Netherlands Indies of the existing alien labor ordinance; the third, relating to enterprise and investment, the Netherlands Indies to extend further facilities to existing or future Japanese enterprises in the Netherlands Indies, while “Japan is to afford within its influence and competence reasonable protection to Netherlands interests in Manchukuo and China …16 Netherlands’ offer of investment to Manchukuo and China is to be recommended by Japan to be purely a question to the governments concerned”; and the fourth relating to [Page 8] strict control by each party of unfriendly press and other published materials.
4. As previously reported in effect, General Pabst said that he called on the Vice Minister for Foreign Affairs on November 10 on another matter and that Tani on his own initiative had stated that the Japanese Government would be prepared to give Netherlands interests a preferred position in China in return for concessions to be granted by the Netherlands Indies to Japanese interests, but that on November 18 Tani had withdrawn the suggestion, explaining that it represented only his “personal views”. It is the opinion of General Pabst that the idea of offering the Dutch privileges in China in return for concessions to the Japanese in the Netherlands Indies had been under consideration for some time, that the exposure of the idea to him last autumn by Tani was premature, and that its official adoption by the Japanese Government and formal presentation to the Netherlands Government may be attributed to the announced policy of the Japanese Government to diminish its dependence upon the United States for certain essential raw materials. He added that he had strongly recommended to his Government that the Japanese proposal be rejected, as he is convinced that the Japanese are trying to move cautiously but nonetheless with determination into the Netherlands Indies and that the conceding to the Japanese of any privilege would be the thin edge of the wedge.