761.94/740
The Ambassador in Japan (Grew) to the Secretary of State
[Received May 18.]
Sir: I have the honor to enclose with this despatch a memorandum93 of a conversation which I had with the Soviet Ambassador on May 1 at his Embassy, returning the call which he made on me on March 9.* [Page 157] During our conversation Mr. Youreneff touched on nearly all the present points of conflict between the USSR and Japan and, as will be noted, declared that he was very pessimistic regarding the future relations between the two countries. His feeling of pessimism seemed to be caused in considerable part by the apparent abrupt failure of the renewed negotiations for the sale of the Chinese Eastern Railway and for this reason it is believed desirable to report certain circumstances attendant upon the resumption of the Sale Conference. It is believed that these circumstances should contribute to an understanding of (the expected reaction in Japan when the failure of negotiations becomes generally known.
During the past month the Soviet Ambassador and the Minister for Foreign Affairs have continued to hold frequent interviews, supposedly to discuss the sale of the Railway. These interviews have been noted in the press with regularity as was also a conversation between Mr. Youreneff and General Hayashi, the Minister of War, on April 21. None of these conversations was made public. Nevertheless, when it became known that “Manchukuo” had drafted a new proposal and that a resumption of the Conference was imminent, public interest was at once aroused. The vernacular press was unanimously optimistic and there were universal expressions of gratification that “Manchukuo” had drafted an offer said to contain the most liberal concessions imaginable. But what concerned the Japanese more directly was the fact that renewal of the negotiations was ascribed to the skill and good offices of Foreign Minister Hirota. At this point Mr. Ohashi, chief “Manchukuo” delegate, gave a press interview declaring that he believed that the new offer was eminently just and reasonable; the Yomiuri Shimbun opined that the expected sale of the railroad would be regarded in official quarters as the first recognition of “Manchukuo” by a state other than Japan; and certain papers such as the Miyako and the Asahi argued that Mr. Hirota would not have brought the conferees together once more had he not felt that negotiations would this time prove successful. A definite psychology of optimism has been created.
It is not yet known what the “Manchukuo” terms are but, as will be seen from the attached memorandum of conversation, they proved unacceptable to the Government in Moscow. Presumably this fact will be made known in a few days when the next meeting of the delegates is decided upon.
If the Conference definitely fails at this time, Soviet-Japanese relations will once more become strained. The Japanese will place the blame squarely upon the Soviets. It is furthermore possible that the Foreign Minister, whose name is now linked with the negotiations, [Page 158] may suffer some measure of embarrassment and also that opportunity may be afforded the militaristic and chauvinist portions of the nation to strengthen their hand. Whether or not the repercussions of the incident extend thus far, it is quite probable that the opinion, heard from time to time, that Japan will never be able to deal successfully with the Soviets by ordinary peaceful methods, will gain more adherents. Furthermore, to point the impossibility of the present dual control of the Railroad, incidents continue to occur, word having recently reached Tokyo that there is trouble at Pogranichnaya where Japanese troops were refused permission to use the station compound and where, on April 30, white Russian guards are reported to have attacked six Soviet railroad officials. In concluding this subject it is hardly necessary to point out that the risk of the eventual seizure of the railroad or its economic ruin still remains and, if the conference fails, may be regarded as considerably increased.
In regard to the fisheries dispute there have been no concrete developments in the last several weeks but it is rumored in the press that a plan is under consideration to organize a joint Soviet-Japanese corporation, capitalized at 60,000,000 yen, to conduct the fisheries. To this corporation, which would be set up under Japanese law, Japan would contribute the fishing equipment of the Nichiro Fishery Company and affiliated companies while Soviet Russia would contribute, besides equipment, the fishing grounds in Soviet territorial waters. It is proposed, according to these reports, that profits be divided on a 50–50 basis and that the concern be headed by a Japanese president and a Soviet vice-president. Although this concern would not operate under many of the handicaps faced by the Chinese Eastern Railway, it is questionable whether Soviet Russia would show much enthusiasm for another international venture of this kind.
Another question which appeared to cause some anxiety in Japan were the reports that Soviet Russia intended to join the League of Nations. Several of the vernacular papers commented editorially on this development and all expressed surprise at the change of attitude on the part of the Soviets. The general opinion seemed to be that the USSR, if reports are true, wishes to join the League for the very reason that Germany and Japan decided to quit it, namely “the great change in the international situation”. It was advanced that Soviets were led to this step by considerations of national safety but that the matter would not affect Japan or Japanese policy which was based on justice and friendship.
Adverting to another of the questions alluded to in my conversation with the Soviet Ambassador it will be seen that his government is said to regard the Mongolian question with equanimity. This opinion [Page 159] is at variance with the consensus of local opinion formed from the available information. It is believed that the Japanese are in a position to make their influence felt in Inner Mongolia, not only through the activity of their agents in that region, but through the influence of measures already taken in the “Manchukuo” Inner Mongolian Province of Hsingan which are designed to benefit the Mongols. Furthermore a member of my staff was told some time ago by a newspaper man who had interviewed the Panchen Lama that that individual declared that the coronation of Pu Yi had a strong ideological appeal to all Mongols. It will be remembered in this connection that the Mongols have long regarded the Manchus as their allies and that, in recent years, they have bitterly resented Chinese immigration. In Inner Mongolia where the desire for a strong autonomous government is said to prevail it is likely that the people will be swayed by the highest bid for their friendship. The Japanese hold strong cards and the fact that Inner and Outer Mongolia are traditionally antagonistic will not further Soviet influence.
But more important than as a sphere of influence the strategic significance of Mongolia is worthy of note. A flank attack on Soviet Russia through Outer Mongolia would isolate the Far Eastern possessions of the USSR and a flank attack on “Manchukuo” through Inner Mongolia would likely prove more decisive than a frontal attack. While the Mongolian question has evidently not matured as yet, public interest has been attracted by press reports of the activity in Sinkiang further west and south. I shall continue to watch for any significant developments regarding this general region, sometimes held to be the greatest danger spot in Soviet-Japanese relations.
Respectfully yours,