893.516/595: Telegram
The Ambassador in the United Kingdom (Kennedy) to the Secretary of State
[Received May 4—8:40 a.m.]
605. In the course of a conversation yesterday the British Treasury referred to the creation by Japan of a new reserve bank in Shanghai and summarized the British attitude briefly as follows: there were still two schools of thought within the British Government, one of which advocated a policy of retaliation against Japan in cooperation with the United States to frustrate such discriminatory Japanese measures; the other believed that to help China to help herself was still the most practical policy having regard to the present vulnerability of Great Britain in the Far East. The British Treasury implied that it belonged to the latter school of thought; that it was to be expected when the experiment of the reserve bank of North China had been unsuccessful, mainly due to the stupidly high rate which was fixed, that the Japanese would try again at a more suitable rate. Pending developments, the British Treasury seems satisfied to take no active steps beyond perhaps lodging protests.