693.002/635: Telegram
The Ambassador in Japan (Grew) to the Secretary of State
Tokyo, May 5, 1938—9
p.m.
[Received May 5—10 a.m.]
[Received May 5—10 a.m.]
296. Department’s 153, May 2, 8 p.m., Chinese customs.
- 1.
- Instructions in paragraph 5 carried out.
- 2.
- Craigie explained to me fully the circumstances which necessitated the sudden conclusion of the arrangement on May 2nd. The Japanese Ministry of Finance acting on the advice of the military had violently objected to the offer of the Vice Minister to release the arrears on the foreign loan and indemnity service at present deposited in the Hong Kong [and] Shanghai Bank amounting to 4,000,000 yuan to meet the overdraft for which they act as security and the Finance Ministry had finally agreed to this provision only if the agreement were concluded not later than May 2nd. Horinouchi said: “We cannot longer hold the military in line”.
- 3.
- Craigie told me that he had definite information from the British Ambassador in China that the Chinese Government must and would object technically to the arrangement for political reasons but that actually they would not oppose it in practice. Craigie said that he had spoken with the Chinese Chargé d’Affaires in Tokyo a month or so ago and had informed him of the general purport of the arrangement and that there seemed to be no doubt that the Chinese Government was aware that an arrangement was under consideration. (We were hitherto unaware of this conversation with the Chinese Chargé d’Affaires.)
Repeated to Shanghai for Hankow.
Grew