893.5151/441: Telegram

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

220. Department’s 113, March 31, 7 p.m., currency control in North China.

In a further discussion last night with my British colleague it developed that the form of action which he proposes is’ an oral approach to the Minister for Foreign Affairs supported by a memorandum or aide-mémoire on the part of the American, British, and French Ambassadors in which would be set forth the discriminatory effect of the present plans of the Japanese authorities in North China for the control of exchange with resultant negation of our rights and interests as well as negation of previous assurances from the Japanese Government. Such action would appear to fall under heading (a) of paragraph 4 of the Department’s telegram.
With regard to paragraph 3 of section 1 of the Department’s telegram, Craigie and Hall-Patch visualize the proposed international supervision of exchange control as consisting of only one or two representatives of the foreign banks in Tientsin to ensure a nondiscriminatory distribution of available exchange. Furthermore this proposal, in Craigie’s opinion, should be advanced only as a second step. Up to the present he has received instructions authorizing only the first step set forth in my paragraph 1 above and this step is to be taken only after the French Ambassador and I have received authorization for parallel action.
With regard to heading (c) of paragraph 4 of the Department’s instruction, Craigie feels that the most effective form of negative pressure would be an endeavor by our respective Governments to prevent or discourage loans or credits to Japan. In this connection I reminded him of the contents of the Department’s telegram No. 338 of December 10, 7 p.m.18 which I had communicated to him at that time. Craigie furthermore feels that publicity might with effect be carried by the financial newspapers in our respective countries showing up the Japanese program and its effect on foreign business in complete contravention of the principle of the Open Door. These points might discreetly be touched upon in the course of our oral representations.