[This Document is the Property of His Britannic Majesty's Government, and should be returned
to the Foreign Office if not required for official use.]
From:
JAPAN,
Decypher.
Sir R. Craigie, (Tokyo).
May 10th, 1938.
D.
8.30. p.m. May 10th, 1938.
R.
4.50. p.m. May 10th, 1938.
No. 582.
-o0c-
Confidential.
Sir A. Clark Kerr's telegram No. 726 raises a question of great difficulty. He himself rules out the possibility of a political loan, but urges that His Majesty's Government should give their backing to scheme which would secure credits for China on a commercial basis.
If granting of such credits would really have effect of insuring our future position in Far East, the question deserves most careful consideration for none can guarantee our future if Japan's victory were to be complete and overwhelming. Moreover Japanese respect strength and so far our protests against maltreatment of our interests in China have lacked any forceful backing. On the other hand the granting of such credits (especially if responsibility were not to be shared with United States and France) would lead to an overwhelming outburst of fury against Great Britain, the ultimate consequences of which it is difficult to predict. If gamble came off, we should earn undying hatred of these people; if it failed, the fact that we should have made attempt will never be forgotten and we should moreover have set the seal upon our losses in China.
Sir A. Clark Kerr considers the alternative of assisting China is a promise of nothing but disaster. While I agree that outlook is grim, I do not regard it as quite so hopeless as this, Even without financial aid China's resistance may prove sufficiently prolonged so to undermine Japan's capacity for political and economic domination that conditions wrung from
a...