894.81/609: Telegram
The Chargé in China (Peck) to the Secretary of State
[Received 5:20 p.m.]
46. Arthur N. Young40 has supplied me with a digest of an analysis of Japan’s financial position issued here on January 13 by “Reuter’s [Page 486] X-ray”, a confidential business news service. Young understands that this analysis, digest of which will be quoted in my 47, January 23, 10 a.m.,41 was prepared by a competent authority. The object of the study is to determine how sensitive Japanese finances are likely to be to possible economic retaliation on account of difference of third party interests in China.
In conversation with me Young made the comment that the most effective retaliatory action would probably be restriction of Japanese exports to western countries because this would reduce Japan’s total capacity to buy imported supplies whereas restriction of exports to Japan of military supplies which press reports is advocated by a committee represented by Mr. Stimson42 and by others while it would be useful would be effective only to the extent that such supplies could not conveniently be procured elsewhere, moreover former measure could be supported as directed toward economic discrimination against the interests of Western Powers and would consequently have less of a political character than so-called sanctions.
Repeated to Peiping, Peiping please repeat to Tokyo.