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small matter for us to agree to accommodate ourselves to the wishes of the local people in North China, and no question of principle was involved.
8. As for the currency, this also was a matter of local administration. Again, it was a small point on a much larger horizon and the Ambassador saw no reason why we could not settle this equally. If we could settle these two problems, other outstanding questions would automatically settle themselves. His Excellency would not propose himself that the Tokyo Conference should be reopened, but preferred to settle individual matters one by one.
9. I told the Ambassador that he might well be right in feeling that it was neither necessary nor wise to have a full-dress meeting of the Tokyo Conference. As regards silver, we would like to find a compromise on this matter which would be acceptable to both sides. You had broached this question to the new Minister for Foreign Affairs, but Admiral Nomura had not seemed anxious to reopen discussions.
10. Mr. Shigemitsu observed that he had not received any report from Tokyo regarding your recent conversations with Admiral Nomura, but he did not consider that your Excellency's suggestions on the question of silver and currency were good enough. He proposed that we should do something on the lines he himself had suggested above, which he thought might be better.
11. Reverting to the particular question of silver, the Ambassador asked why we did not determine the ownership of the silver. The Japanese considered that it belonged to the local Chinese. The Japanese Government did not regard the Government of Chungking as having any rights in the matter, since the Japanese Government no longer recognised them. They did, however, support and recognise the Government of North China, and they considered their right to the silver to be undeniable. The Ambassador continued at some length and with some ardour to urge this view. Our attitude, he said, gave the impression that we were not neutral in the dispute between China and Japan, as the Japanese Government were neutral in the war which we were waging with Germany. The new Government in Tokyo were faced with serious internal difficulties, and Mr. Shigemitsu considered that we should do what we could to help them. One of the best methods of doing this was to meet them over the silver and currency questions.
12. I assured his Excellency that I would be glad to consider his arguments with regard to the ownership of the silver. If we were going to settle this question, it must be by some compromise, which we would do our best to find and which would not raise political questions. I fully recognised the efforts which his Excellency was employing to improve our relations with each other, and we would do our best to help. I thought that there was, in fact, a better feeling between our two countries. The tone of the press was more helpful, and I hoped that we could use this feeling to bring about an improvement in the general situation. I should like to keep in close touch with him on this matter.
13. His Excellency expressed his gratitude, and concluded by repeating that it was these small things which continued to be the root of our difficulties in the Far East.
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