Office of the Historian

894.6363/180: Telegram

The Ambassador in Japan (Grew) to the Secretary of State

Tokyo, March 2, 1935—noon.
[Received March 2—10:36 a.m.]

44. Embassy’s 28, February 8, 6 p.m.

1.
The special representatives of the British and American oil interests are sailing today for Manila and are planning to return to Japan about April 1.
2.
The special representatives feel that the present status of the conversations is discouraging but not yet hopeless. The Japanese officials engaged in the conversations had agreed orally to various desiderata of the foreign oil interests but when the agreed points were embodied by the foreign oil interests in a memorandum the officials retreated from their position, suggested various emasculating alterations in the memorandum and stated that they had no authority to bind the Government and would need time to ascertain the views of other departments concerned. They therefore suggested that the conversations be suspended until after the Diet session, due to close March 22. The special representatives agreed to this procedure, believing also that the officials would thereby have an opportunity to endeavor to modify the stockkeeping provisions of the law without appearing to be acting under foreign pressure.
3.
The foreign oil interests have consistently taken a strong stand and have refused to modify their views in any essential particular but they feel that they will not succeed in forcing any alterations in the law unless they give the Japanese Government definitely to understand that the foreign oil companies will have to withdraw from Japan should no modifications be made. The special representatives have not yet decided to make this announcement and cannot reach a decision until they have ascertained upon their return to Japan to what extent the Japanese views can be reconciled with theirs.
4.
In the course of a conversation with the Minister for Foreign Affairs this morning I said to him informally that the special representatives of the foreign oil interests hoped that during their absence some concrete solution of their difficulties might be found so that they could visualize their future business in Japan with confidence and I expressed the hope that the Minister would use his good offices with his colleagues in the Cabinet to that end. Hirota replied that the subject of oil is an acute question in the Diet and he therefore felt that the matter should be left in abeyance until after adjournment when he believed that some satisfactory agreement could be reached. He added significantly: “You know we are absolutely dependent on American oil.”
5.
My British colleague proposes to mention the subject similarly to the Foreign Office next week.
Grew