894.6363/150: Telegram
      The Ambas8ador in Japan (Grew) to the Secretary of State

                                  TOKYO, December 13, 1934-2 p. m.
                                [Received December 13-8: 20 a. m.]
  274. 1. In recent conversations between Kurusu of the Japanese
Foreign Office and Neville of this Embassy and Sansom of the Brit-
ish Embassy, held at Kurusu's request, he advanced proposal that, as
the Japanese petroleum law was oppressive for all oil companies,
Japanese as well as foreign, the foreign oil companies should com-
bine with the Japanese oil companies in a strong joint protest to
the Ministry of Commerce and Industry in an endeavor to obtain
some modification of the law. He intimated that the Japanese au-
thorities are beginning to realize the difficulties entailed by the law
and are weakening in their attitude and he mentioned the dissatis-
faction of Japanese oil men with the law.
  2. Department's 201, December 10, 8 p. m. In the opinion of the
British Embassy here the representations which it proposes to make
would not constitute an official ch~marche but rather an informal pav-
ing of the way for the possible future discussions between the repre-
sentatives of the foreign oil companies and the Japanese authorities,
in that the proposed representations would point out that the Japanese
Government's reply of October 31 77 was insufficient to remove the
anxieties felt by the British oil interests, especially as the reply did
not refer to the question of stock holding.
  3. I feel that failure to inform the Japanese Government in some
way that its reply to our original representations was unsatisfactory
would be misleading and might be misinterpreted. Acceptance with-
out comment of the Japanese reply would place the oil companies in a
less favorable position in their future negotiations with the Japanese
authorities because it could create the impression that their Govern-
ments were not continuing to support them.
  [4.] It appears, as is indicated in paragraph 1 above, the Japanese
authorities are believed to be showing signs of weakening. Further
representations at the moment therefore might be effective in pre-
paring the way for any compromise plan which the representatives
of the foreign oil companies may evolve from their present discus-
sions at Shanghai.
  5. It seems important both to Clive and myself that our informal
representations should be so formulated as to avoid on the one hand
creating an impression that we are now going to let our companies
work out their own problem without further diplomatic support,
and equally to avoid on the other hand placing the Japanese Govern-

" Text of reply not printed; for substance, see telegram No. 241, November
1,
6 p. m., from the Ambassador in Japan, p. 753.



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JAPAN