893.516/603: Telegram
The Ambassador in the United Kingdom (Kennedy) to the Secretary of State
[Received May 12—2:10 p.m.]
671. At the instance of the British Treasury, a member of the Embassy staff had a conversation with Hall-Patch54 who is temporarily doing Leith-Ross’55 work. Hall-Patch stated that Craigie had been requested to attempt to obtain assurances from the Japanese Foreign Office and the Bank of Japan regarding the future operations and conduct of the new Reserve Bank of Shanghai but the British Treasury does not expect to obtain satisfaction. Hall-Patch received the impression from Arakawa56 that the Japanese army intended to use the new reserve bank as an instrument for monopolizing the Yangtze trade when it was opened.
Hall-Patch indicated that he was concerned about this development since it seemed clear that the Japanese would not repeat the mistakes they had made with the Reserve Bank of North China. The first step in preventing the Japanese from gaining a monopoly of the export bills was to keep the reserve bank out of the clearing and this the Hong Kong-Shanghai Banking Corporation was in a position to do. Hall-Patch expressed confidence that all the British banks could be brought into line to present a united front and implied that the larger British company [companies?] would be approached as well. He went on to say that when Craigie had failed to obtain satisfaction from Tokyo, the British Government would probably approach the other interested governments with a view to obtaining a united front on the part of all foreign banks and, if possible, the larger foreign companies as well.