106
4
Japan and Manchukuo, the Chinese National Government would be obliged to take a broad view of the situation, abandon its anti-Japanese and pro-Communist policy and return to the right path. If it should persist in its present policy Japan would have to crush it. This statement was interpreted by the press as indicating a possibility that the Hiranuma Cabinet might be prepared to reconsider in certain circumstances the policy of having nothing to do with the Chiang Kai-shek régime.
North China Currency.
141. A note was received from the Japanese Government dated the 13th April in reply to His Majesty's Ambassador's protests about the new currency and exchange control system brought into force in North China on the 11th March. The reply stated that the object of the measures was to secure that the Federal Reserve notes should adequately fulfil the functions of a trade currency. The Japanese Government could not recognise that the general control of trade and foreign exchange transactions in North China was in contemplation, and denied that discrimination would be practised. The Japanese Government did not consider that the measures ran counter to assurances that third-Power interests would be protected, and they were not withholding their co-operation from the new system.
Central China Bank.
142. His Majesty's Embassy, Shanghai, were informed on the 29th April that the Renovation Government in Nanking, in co-operation with the Japanese authorities, was establishing a China Commercial Development Bank at Shanghai with a capital of 50 million yen, subscribed jointly by the Nanking régime and by Chinese and Japanese banks. The new institution would issue bank-notes convertible into foreign currencies at par with the Chinese legal tender and not linked with the yen. The bank would also deal in legal tender, but its notes were expected to supplant the latter eventually as a suitable domestic currency. The chief purpose of the bank was stated to be to assist in the revival and development of Central China trade, and friendly participation by banks of third Powers was said to be welcome.
143. The counsellor of the Japanese Embassy, in describing the reasons for the foundation of the new bank to the commercial counsellor of His Majesty's Embassy, Shanghai, professed, on behalf of the Japanese authorities, anxiety as to the future of the China legal tender. It is interesting to contrast his observa- tion with those of the Japanese Minister for Foreign Affairs, who, on being informed of His Majesty's Government's action in setting up the stabilisation fund, remarked that there seemed to be no reason for anxiety on behalf of the legal currency.
Dyott Case.
144. Mr. Dyott, whose kidnapping was reported in the Political Diary for March, paragraph 101, was returned to the British authorities on the 3rd April, after several weeks of effort on the part of the British and Japanese authorities in searching for him and on the payment to Chinese bandits of 50,000 dollars
ransom.
Shanghai.
145. According to reports in the press in Japan, the Japanese Consul- General at Shanghai has kept up a veritable bombardment of complaints against the alleged inadequate measures taken in the International Settlement to suppress anti-Japanese activities. Notes were apparently handed to the chairman of the municipal council on the 12th, 21st and 26th April. Mr. Miura has been less successful in his endeavours to solve the major outstanding cases of complaints by British interests against the proceedings of the Japanese authorities.
General.
146. It has been announced in the press that full Japanese Ministers will be appointed for the first time to Panamá, Iraq, Bulgaria and Venezuela and that the legation in Spain will shortly become an embassy.
Position of the Government.
5
HOME AFFAIRS,
147. Baron Hiranuma's Government has continued to follow in the foot- steps of the Konoye Government, basing its foreign policy upon the Anti- Comintern Pact and having as its chief objective the establishment of a new order in East Asia. It had been anticipated that after the termination of the Diet session the Prime Minister would endeavour to strengthen the Cabinet by filling the vacancies at the Ministries of Overseas Affairs and of Communications; and on the 7th April it was announced that General Koiso and Mr. Tanabe had been appointed respectively to these two posts. General Koiso lost little time in making it clear that he favoured a more vigorous policy abroad, that he had plans for speeding up the settlement of the China incident and that he advocated the strengthening of the Anti-Comintern Pact. He is also said to be planning a reorganisation of Japan's southward development policy. Since his appointment, however, the Government has come in for a certain amount of mild criticism, owing to its failure to announce more concrete details regarding these various plans, and the press complain that the public ought to know what precisely is meant by the "strengthening" of the Anti-Comintern Pact.
Selection of a new President for the Seiyukai.
148. The political atmosphere has been vitiated by a most undignified squabble over the choice of a new president for the Seiyukai in place of Dr. Suzuki, who is still nominally president, but whose term of office expires on the 22nd May. Pending the appointment of a new president the leadership of the party has for the past two years been in the hands of an executive council of four. Two of these, Mr. Hatoyama and Mr. Nakajima, who is head of the so-called "reformation league,' a powerful faction within the party, have been rival candidates for the new post. Attempts were made early in April to settle the question amicably, but this proved impossible; tempers rose on both sides, and on the 28th April the Nakajima faction, threatened by the appearance of a more dangerous opponent than Mr. Hatoyama, attempted a coup d'État by forcibly occupying the headquarters of the Seiyukai.
House of Representatives.
149. Owing to the dissolution of the Tohokai and the resignation from the House of Representatives of their leader, Mr. Nakano, the ten Diet members of the former party have now gone to swell the ranks of the Independents.
National Spiritual Mobilisation Committee.
150. This committee was established by Imperial Ordinance at the end of March. A similar non-governmental body had been in existence for some time, but had been unpopular owing to suspicion of its real objectives. The chairman of the committee is General Araki, the Minister of Education, and the director- general is a retired lieutenant-general.
National Money Saving.
151. The Savings Encouragement Committee is aiming at a saving of 10 thousand million yen during the next fiscal year. Every effort is to be made to make the nation live more economically, and salaries of Government employees are to be kept down. At the same time the police and postal authorities are clamouring for an increase in salaries for their employees, who are being enticed away by the sight of lavish spending by munition workers.
School for Young Men and Women.
152. An Imperial ordinance was promulgated on the 26th April making it compulsory for young people between the ages of 13 and 19 who are no longer at school to attend educational courses. A five-year course is prescribed for men and a three-year course for women, and the minimum attendance required is, for men, 210 hours for the first two years and 180 hours for the succeeding three years, and for women, 210 hours each year. The subjects to be studied are ethics, civics and business or domestic science, in addition to ordinary school subjects and physical training. It is stated in the press that the hours of attendance will be
107