761.94/709
The Ambassador in Japan (Grew) to the Secretary of State
[Received March 12.]
Sir: Subsequent to the drafting of my despatch No. 690 of February 2260 the Foreign Minister had an important conversation with the Soviet Ambassador on that day and was able to report to the Diet in the afternoon that concrete progress had been made towards settlement of the fisheries dispute and that prospects for the sale of the Chinese Eastern Railway were definitely brighter. Today, February 23, the Foreign Office has just announced that the following points were agreed upon at the conversation. It will be seen that these points apparently break the deadlock which has so long prevented a resumption of negotiations for the sale of the Chinese Eastern Railway. They seem to imply a definite improvement in the Soviet-Japanese situation and are as follows:
- 1.
- The Soviet Government has agreed to reconsider its actions with regard to the yen–rouble exchange rate.
- 2.
- The Soviet Ambassador expressed the desire of Moscow to resume negotiations for the sale of the North Manchuria Railway, and to compute the value of the line in yen rather than in roubles as heretofore.
- 3.
- The Soviet Ambassador submitted certain terms for the release of the Russian prisoners being held by Manchukuo. These terms are acceptable to Japan and, on their approval by Manchukuo, the prisoners will be released. What the terms are has not been made public.
In commenting on this sudden favorable turn of events, it may be remarked that the manner in which the fisheries question arose suggests the possibility that the Soviet Government deliberately acted with the intention of securing a concession from the Japanese on the question of the sale of the Chinese Eastern Railway. The manoeuvre, if such it was, has apparently been successful, and, while it is perhaps premature to be confident that an early solution of these two problems is probable, nevertheless active negotiations are apparently in the offing. However, in the case of the Chinese Eastern Railway, it will be remembered that resumption of the negotiations will not in itself be reasonable cause for optimism as to their success.*…
Respectfully yours,