792.94/137: Telegram
The Minister in Thailand (Grant) to the Secretary of State
[Received August 3—12:08 p.m.]
389. I was called to the Foreign Office this afternoon by the Deputy Minister of Foreign Affairs after the close of office hours to convey to my Government on behalf of the Prime Minister and Minister of Foreign Affairs the suggestion that the American Government establish an Embassy in Bangkok with a view to counteracting the establishment of a Japanese Embassy here. I suggested that it would be more appropriate consequently if the Thai would resist this Japanese pressure by emphasizing to the Japanese that it was not their policy to establish Embassies since Thailand is small and Embassies are costly. I was informed that the Thai Government has agreed to recognition of Manchukuo under Japanese pressure but has refused to recognize the Nanking government. I was informed further that pursuant to Japan’s request a syndicate comprimising [comprising] decision of [sic] three Thai Banks, the Thai Commercial Bank, The National and City Bank and Bank of [Asia], has been formed with a view to extending credits up to 10,000,000 baht [Page 251] to facilitate the purchase of commodities such as rice and rubber by Japan; the Thai Government insisted upon gold as security which was, with this understanding, agreed to by the Japanese. The arrangement is with the Yokohama Specie Bank.
The Deputy Minister of Foreign Affairs seemed to be particularly apprehensive regarding the situation and wanted to know if I had received any response from my Government regarding the Thai suggestion that the American Government make a public announcement of its friendship for Thailand and the desire to be of assistance as outlined in my telegram No. 371, July 28, 1 p.m. He reiterated that no demand for military bases has been made so far by Japan but he intimated that they are anticipated and that the Thais would resist military aggression by Japan.