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Although there has been no decision on the part of the Department to halt discussions looking toward the conclusion of a consular convention with Japan, actually the informal discussions in regard to the proposed convention between officers of the Department and officers of the Japanese Embassy have been in suspense for several months because of the failure so far of the Japanese to give satisfactory assurances that American consular officers in Japan shall have the right to visit American citizens under detention or arrest in that country. For your confidential information it may be stated that the Department is not disposed to proceed further with the discussions until such assurances are forthcoming.

The Department suggests that hereafter in each case coming to the attention of the Embassy of American citizens being held incommunicado, a communication, formal or informal as the Embassy may consider appropriate, be addressed to the Foreign Office in which should be set forth the circumstances of the case and inquiry made in regard to the reasons for refusal to permit a visit by the consular officer. In each instance the attention of the Foreign Office might be invited to the fact that it is the custom in the United States and most other countries to permit such visits by consular officers.

At the same time, the Department desires that the Embassy give consideration to the possibility that special effort on the part of consular officers to develop useful contacts among local officials might in some cases place them in position more effectively to intercede in protection cases of this nature. The Department in making this observation does not wish it to be implied that any criticism is intended of the handling by the Vice Consul at Yokohama of the case under reference. The observation is offered as a suggestion for consideration. Very truly yours,

For the Secretary of State:

HUGH R. WILSON

REFUSAL BY THE UNITED STATES GOVERNMENT TO AUTHORIZE OPERATION OF A JAPANESE AIR LINE FROM TAIHOKU (FORMOSA) TO MANILA

811b.79694a/11 Memorandum by the Chief of the Division of Far Eastern Affairs

(Hornbeck)

[WASHINGTON,] June 7, 1937. Reference, memorandum of conversation between the Japanese Ambassador and Mr. Hornbeck, March 16, 1937,35 and subsequent papers.

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On March 16, 1937, the Japanese Ambassador, Mr. Hirosi Saito, informed Mr. Hornbeck orally and informally that the Japanese Government had instructed the Ambassador to request permission for the operation of a Japanese air line from Taihoku into Manila. Mr. Hornbeck inquired whether this request would imply and carry with it the principle of reciprocity. The Ambassador replied that it was his understanding that reciprocity was intended.

Under date March 31, the Department informed the Secretaries of War, Navy, Treasury, Commerce, and the Postmaster General of the matter under reference, with request for comments.

At a meeting of the Interdepartmental Committee on Civil International Aviation, early in April, this matter was discussed (simultaneously with discussion of the pending request of the Netherland Government to establish air line communication between the Netherland East Indies and Manila 37), and there was arrived at a consensus of opinion unfavorable to the Japanese request: it was decided that the Department should inform the Japanese Ambassador that the American Government is not favorably disposed toward the proposal made.

By the end of April, replies had been received from the Secretaries of War, Navy, Treasury, Commerce, and the Postmaster General, unanimously unfavorable.

Mr. Hornbeck conferred with Judge Moore 38 and it was decided that the reply should be given by Mr. Hornbeck, to whom the original inquiry had been addressed, in the same informal and oral manner in which the Japanese Ambassador had communicated the inquiry.

As the reply to be given was in the negative, and as the matter was in no way urgent, it was considered by officers of FE 39 advisable to await, for the communicating of this reply, a favorable moment, preferably a moment when, some other matter being under discussion, communication of this reply might be made to the Japanese Ambassador casually.

On June 4, Mr. Kitazawa of the Japanese Embassy inquired of Mr. Ballantine 40 when a reply might be expected to the inquiry which the Japanese Ambassador had made of Mr. Hornbeck (in relation to the matter under reference).

On June 5, Mr. Hornbeck informed the Japanese Ambassador orally and informally that, “this matter having been given consideration by the authorities concerned of this Government, he was under in

On November 9 it was decided to enter into negotiations with the Netherlands for a reciprocal air agreement between the Philippines and the Netherlands East Indies, but no results had been obtained to the time of the outbreak of war in Europe.

38 Ř. Walton Moore, Counselor of the Department of State. * Division of Far Eastern Affairs.

Joseph W. Ballantine, of the Division of Far Eastern Affairs.

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struction to say that the American Government is not prepared to respond in the affirmative to the request under reference”.

S[TANLEY] K. H[ORNBECK]

EXCHANGE OF NOTES BETWEEN THE UNITED STATES AND JAPAN ON MARCH 25, 1937, IN SETTLEMENT OF PERPETUAL LEASES IN JAPAN

894.52/48

Memorandum of Conversation, by the Ambassador in Japan (Grew) 42

[TOKYO,] January 13, 1937. The British Ambassador 43 called on me today and said that after conference with representatives of the British perpetual leaseholders in Kobe, he had obtained their reluctant consent to propose to the Japanese Government that the perpetual leases be terminated at the end of a period of five years dating from April, 1937. Sir Robert said that he was to see the Minister for Foreign Affairs tomorrow and would present to Mr. Arita a note, a copy of which he would send to me, proposing this solution of the case. Sir Robert said he was aware that our policy had been to let the American perpetual leaseholders deal directly with the Japanese Government and that our Government had taken no official action. He hoped, however, that we might now see our way clear to taking official action along the lines of his own proposal. I replied that we had purposely abstained from official action in order not to embarrass or complicate his own negotiations, but now that a definite proposal was in sight, I would submit the matter to our own perpetual leaseholders and would then take it up with Washington. I said that I thought the five year period was a reasonable solution of the matter, particularly as the system of perpetual leases is an anachronism in modern international relations. Sir Robert concurred and said that no international agreement involving rights in perpetuity could be expected to stand.

J[OSEPH] C. G[REW]

894.52/49: Telegram

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

TOKYO, February 25, 1937—1 p. m.

[Received February 25—7:10 a. m.] 63. 1. The British Ambassador has informed me that the Japanese Foreign Office has accepted the British proposal for the settlement of the perpetual leasehold question a copy of which was transmitted with despatch Number 2240 of February 1.4 The Japanese Foreign Office must obtain approval of the Privy Council which is expected within the next 2 weeks after which notes of acceptance will be exchanged. The British Ambassador also informed me that he believes that the Japanese Foreign Office will shortly approach us asking that American holders accept the same terms.

41 For previous correspondence, see Foreign Relations, 1936, vol. iv, pp. 964 ff.

Copy transmitted to the Department by the Ambassador in Japan in his despatch No. 2240, February 1; received February 19.

48 Sir Robert H. Clive.

2. I have consulted one of the larger American holders who informed me that he would be willing to accept the terms of the British proposal and that he would consult other American holders.

3. The Department's instructions regarding the attitude the Embassy should assume towards the American holders with respect to acceptance by them of the same terms are requested.

GREW

894.52/49: Telegram

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

WASHINGTON, February 27, 1937—2 p. m. 36. Your 63, February 25, 1 p. m.

1. The terms of the plan of settlement arrived at between the British and Japanese Governments would seem to be less favorable to the leaseholders than the terms which recommended themselves to this Government as constituting an equitable basis of settlement. In view, however, of the fact that British interests involved are substantially greater than American interests, this Government desires to avoid the taking of position which would obstruct conclusive disposal of this long-standing issue. You may, therefore, orally inform the Foreign Office that this Government is prepared to accept settlement on the basis of the proposal presented to the Japanese Government by the British Ambassador in his note of January 14.

2. For guidance with regard to Embassy's attitude toward American leaseholders, please see paragraph 4, Department's telegram No. 138, November 3, 3 p. m.45

HULL

894.52/50 : Telegram

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

Tokyo, March 4, 1937–3 p. m.

[Received March 4–9:15 a. m.] 70. Department's 36, February 27, 2 p. m. I orally and informally advised the Vice Minister for Foreign Affairs today that the United States Government is prepared to accept settlement of the perpetual lease question on the basis of the proposal presented to the Japanese Government by the British Ambassador in his note of January 14. I made it clear that the legal rights of American leaseholders can not be compromised by such an acceptance and in order that the Embassy may discuss the matter with the leaseholders I suggested that no publicity at present be given to my announcement. I, however, suggested to the Vice Minister that before any formal approach is made to our Government by the Japanese Government it would be helpful if he would advise me informally in advance of any such step so that if desirable a public announcement might then be made that the American Government had already indicated its willingness to accept settlement of the question prior to a formal approach by the Japanese Government. The Vice Minister agreed to this procedure. He expressed appreciation of our attitude.

4 Despatch not printed; but see memorandum by the Ambassador in Japan, supra.

4 Foreign Relations, 1936, vol. IV, p. 979.

I believe that the Embassy should now inform the principal American leaseholders of our Government's position.

GREW

894.52/51 : Telegram

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

TOKYO, March 4, 1937–7 p. m.

[Received March 4-9:30 a. m.] 71. My telegram 70, March 4, 3 p. m., perpetual leaseholds.

1. This afternoon the Chief of the Treaty Division of the Foreign Office handed a member of the Embassy staff in strict confidence, and as he said with the consent of the British Ambassador, copies of the notes with accompanying letters to be exchanged between the Japanese Government and the British Embassy.15a The notes confirm substantially the terms proposed in the British Ambassador's note of January 14, copy of which accompanied our despatch 2240, Febru

ary 1.

2. The letters accompanying the notes are designed to clarify the statement in the notes that "until the 31st day of March, 1942, the present position as regards exemptions shall be maintained”. The letters state that this is to be understood as providing that until March 31, 1942, no taxes at present in force shall be collected other than those hitherto collected from the leaseholders nor shall any taxes which may be introduced in future be collected from them if such taxes are directly connected with the perpetual leaseholds. The letters also specify that in the event of a leasehold being transferred it shall continue to be subject to the terms of their agreement in the notes.

ke British and Foreign State Papers, vol. CXLI, P. 390.

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