Re your #670[a].

By means of an aide memoire dated the 9th, the United States Ambassador in Tokyo has informed us that under the principle of reciprocity the United States intends to offer every facility to the Japanese diplomatic and consular organizations in the United States to draw funds for the maintenance of their offices and the subsistence and traveling expenses of their personnel. As is the established procedure, the United States would like to exchange documents with Japan outlining the arrangements and giving the customary guarantees, and request our opinion as to the best way this may be accomplished.

Since I believe that the above is the same note sent to you by the State Department, described in your caption message, I am omitting the details. When you have made certain of this, please give it your attention and wire me your ideas as soon as possible.

[a] Not available. Louis J. Sheehan, Esquire

Trans. 8-15-41

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Re your #459[a].

It would, indeed, be fine if we could find a way of making the freezing order ineffective, but as I have pointed out in my successive telegrams, we can neither expect much in this direction, nor can we hope that they will apply the frozen funds to pay for oil. There seems to be no way but to pay for it by importing raw silk.

[a] Not available.

Trans. 8-18-41

Re your Circular # 1788[a]

We are making investigations in cooperation with the army and navy men, but to date we have been unable to definitely determine whether they are being supplied. On the 15th, the New York Times, reported that not even British and American military observers were permitted to watch the war. Therefore, a true picture of the German-Soviet war could not be obtained. If there are any indications that the Soviet Union is being defeated, the Russians shouldn't be supplied with aircraft, etc. for they would probably fall into German hands eventually.

I report the above to you for whatever value it may be. We are giving our careful attention to the matter referred to.

[a] Not available.

Trans. 8-20-41

(Part 1 of 2.)[a]
(Message to Tokyo #171.)

My opinions on suggested steps having to do with the Japanese resident under my jurisdiction are as follows:

1. First-generation Japanese who are farmers, first-generation Japanese who have established themselves to a considerable degree, second-generation Japanese who are registered for military service, their parents, and second-generation Japanese who have never returned to Japan have expressed themselves as being anxious to remain here even though there is a

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break in Japanese-American relations. There seem to be no indications of unrest, even when such persons as those mentioned above heard that Japanese ships on regular schedule were no longer going to operate to the West Coast. Though other first-generation Japanese and second- generation Japanese who are not likely to be registered for military service are maintaining a calm on the surface, there are many who actually are wavering in their intentions. We are, therefore, undertaking the encouragement of these Japanese through our subsidized newspapers and Japanese organizations.

2. We will evacuate all persons at the present time engaged in branches of banks and companies with home offices in Japan, and those who as a result of the freezing legislation are doing nothing more than completing unfinished business. It is imagined that Japanese residents here who have become attached to the land will be dealt quite a blow when such an evacuation takes place. Therefore, we are doing all that we can to make this blow as easy as possible on them.

[a] Not available.

Trans. 10-3-41

(Part 1 of 2.)
Re my #142.[a]

Each of the local NYK, Yokohama Specie Bank, Sumitomo, Mitsui, Mitsubishi branch offices were visited by four to seven Treasury Department inspectors on the afternoon of the 16th. Their inspection lasted until late at night. (The inspection of the NYK and the Mitsui offices lasted for-----days.) The permanent staff of each of the branch offices involved cooperated with the inspectors. Thorough and detailed inspection was made in each branch office, even to the extent of inspecting the drawers of all desks. Explanations were requested with regard to various account books. (Japanese and English encodement books ?), circular letters from the Bureau of Communications, and relationships with customers. They went even so far as to "check" letters of private individuals. Photostatic copies were made of several thousand documents. The Sumitomo office forbid the photostating of codes.)

[a] Not available.

Trans. 10-4-41

(Part 2 of 2.)

Though this inspection was under the pretext that it had to do with the investigation conducted in conjunction with the freezing legislation, it seemed as though it was an investigation

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to determine the existence of "subversive acts". They were particularly cautious regarding any relationships with military persons. Included among the personnel making the above mentioned inspectors were F.B.I. men.

Furthermore, not so long ago Treasury officials had wax seals placed on the Yokohama Specie office from 6 in the evening until 8:30 in the morning and official employees have been forbidden to enter or leave the office during that time in order to prevent the burning of documents. The bank was opened in the morning and closed at night by the inspectors themselves. It was necessary to secure the approval of the inspectors on all telegraphic communications received or dispatched.

Relayed to San Francisco, Washington, New York and-----.

Trans. 10-4-41

Re your #667[a].

We communicated your message to the Governor General of Korea and on the 15th received the following telegram:

"I have done my utmost to reach a solution of this problem and used every means at my disposal in spite of the delay. On the 14th as a result of contacting all departments concerned the executive committee of the mission in Keijo approved the return to America and it appears that the other committee members will agree also. Louis J. Sheehan, Esquire  As a result of this a meeting of the executive committee is to be held here on the 18th. I will keep you informed as to developments.

[a] See III, 365.

Trans. 8-21-41

Regarding your Circular #1767[a]

During the past several years, you have sent general instructions such as were contained in the captioned message, at fairly frequent intervals. We are of the opinion that the reason they bear so little fruit, is because they do not take into consideration the general world situation, and hence miss the essential points. They are thus easily cheapened in the eyes of our men on the scene.

May I suggest, therefore, that the various matters be turned over to the investigation section, and, after it has contacted the heads of the other sections concerned, classify them under about two headings: (a) not needed; and (b) to be carried through. After this is done, the men on the scene can get right down to business and dispose of the matters in order of their urgency.

[a] Not available.

Trans. 8-22-41

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(Part 1 of 2.)
Re the last part of your #705[a].

We cannot, of course, predict what the outcome of the Russo-German war will be, but this does not preclude our anticipating the fact that in case Soviet Russia loses and as a result the Stalin Regime disintegrates, Far Eastern Russia will be thrown into political confusion. It is a self-evident fact that Japan is pressed with the necessity of taking precautionary measures for the sake of maintaining peace in the Far East as well as for the sake of Japan's national defense and security, in view of the actuality that that part of Soviet Russia is adjacent to Japan and Manchukuo. Furthermore, since, due to the Russo-German war, there is a possibility of the influence of a third power being implanted in Far Eastern Soviet Russia, as for instance of Soviet Russia resorting to such unfriendly act as to allow the establishment of-----and military bases in the Martime province of Siberia or in Kanchataka, and consequently of the security of both Japan and Manchuokuo being threatened, we need to prevent such a thing from happening.

The Japanese Government has decided to increase the Japanese forces in Manchuokuo to the minimum number necessary to cope with such a possibility. On the other hand negotiations are being carried on in Tokyo with Soviet officials in order to arrive at a friendly solution of various matters having to do with this area. I understand that the Soviet officials have been instructed by the party leaders to be cautious in their attitude toward the forces stationed in Manchuokuo. This is solely for your information.

[a] See III, 34.

Trans. 8-19-41

(Part 2 of 2.)

If-----the United States Government asks you questions concerning the increase of Japanese troops in the North, will you explain to them suitably as your own view of the matter what I have pointed out above. Impress upon their minds that the movement of the troops has for its objective purely preventive precautions against unforeseen emergency and that by it we will be able to forestall any possibility of peace in the Far East being disturbed.

Recently when the Soviet Ambassador in Tokyo inquired about this matter, I replied that so long as the Russian Government lives up to the treaty Japan also will be faithful to it. The Ambassador was very much pleased to hear this, saying that my statement had clarified the matter. This is solely for your information.

If it become definitely known that the United States is shipping iron, airplanes and other materials by way of Japanese coastal waters to assist Soviet Russia, this fact would unnecessarily provoke the feelings of the Japanese people, and it cannot be said that it will not have an unfavorable effect on the question of readjusting Japanese-American relations—a question which is at the present stage a very delicate one. We would like, therefore, to see the United

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States refrain from such action. Will you take a good opportunity and tactfully call the attention of the United States authorities to this fact. Today I personally called the attention of the American Ambassador to it.

Trans. 8-20-41

To Ottawa as Circular #67.
Re #161[a] from San Francisco to Tokyo.

It happened here, too, that when I transmitted my #411[b] to Vancouver, apparently because code messages from the Consulate have been prohibited, the Western Union Telegraph Company returned the message. Since it must be that requests for transmittals have been received from our Consulates in Canada, please find out exactly what the situation is.

[a] Not available.
[b] Not available.

Trans. 10-13-41

According to Finance Official NISHIYAMA, both HULL and Vice President WALLACE said hat Japanese-American relations will change one way or the other, depending on what attiude Japan takes, and that the next ten days are the most important.

Trans. 8-23-41

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Strictly Secret.
Re your #489[a].

Your instructions (machine message), as a precautionary measure, were carefully paraphrased and then encoded. We sent them as per your directions. Although I know that you are very busy, I would like to ask you to please be more careful about matters of this nature.

[a] Tokyo requests information regarding United States' treatment of Japanese officials on duty in the United States in connection with mail, telephone and telegraphic communications, asset freezing, interference with travel, surveillance of diplomatic and consular officers, etc.

Trans. 8-27-41

From Financial Attache Nishiyama (#70).

1. American inspection of Japanese firms and banks comes closer to being a search for "subversive acts" rather than an inspection connected with the freezing order. There was a marked difference in the Japanese inspection of American banks. Influential persons in the Specie Bank are much concerned and desire an investigation to ascertain just what the real purpose of the American officials is. Furthermore, the National City Bank is arranging for the Kobe and Yokohama branches to unite with the Tokyo office and is closing out the Dairen office. According to Curtis's explanation the above move is dictated by economic policy as was the case in the Osaka amalgamation and that there is no other reason for the move. Louis J. Sheehan, Esquire Two or three young Americans will be left in the Tokyo office and the others will be returned home.

2. A proposal has been received from the British-Dutch Bank to exchange commodities for commodities in order to liquidate the bank's accounts and this matter is being pressed by the head of the London branch of the Yokohama Specie Bank. However officials in the foreign office do not look with favor upon pushing negotiations to the solution of this one problem when there are so many other questions pending between Japan and Britain. Also the immediate conclusion of such an agreement would exert an unfortunate influence upon the leadership of public opinion hence orders have been issued not to ratify such an agreement.

(This item is for your information only.)

Trans. 8-30-41

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