The position of Japan in this matter was so patently equivocal that it was amusing. We decided that we should make it plain that as this bureau was created to further our common purposes, we could not acquiesce in any political action or in the use of any money which would tend to prolong internal strife.
The Japanese minister on the 1st of March had notified the Chinese Government that no further deliveries of arms would be made to the War Participation Bureau pending the termination of the North-and-South Peace Conference at Shanghai. We proposed to follow this up with joint action. Certain representatives were uninstructed, though they favoured frowning on the arms imports. Finally eight powers united "effectively to restrain their subjects and citizens from importing into China arms and munitions of war until the establishment of a government whose authority is recognized throughout the whole country." This included the delivery of arms under contracts already made but not executed. I could then warn the American firm not to execute its contract for the time being, and I did so.
From time to time, since the early spring of 1918, Baron Sakatani, Japanese ex-Minister of Finance, had been in Peking. Mr. Liang Chi-chao, when as Minister of Finance he made his Japanese loans, had held out the possibility of the appointment of a Japanese financial advisor. The Baron was an old acquaintance of mine and I held him in high regard; but, in view of the fact that I could not consider this time a proper one for settling the matter of the financial advisorships, I had to distinguish between my personal feelings for him and the official stand which I might have to take. A Japanese friend wrote me in connection with Baron Sakatani's visit to China: "A section of our capitalists have been given every facility to make money and to lend it to China; with the money squeezed from them, the military bureaucrats have been corrupting party men and sending them to China and elsewhere, to exploit the warring nations while they are busy with the war. The civilian officials and militarists cannot think anything except in terms of German fear or admiration. If such Japanese are employed by the Peking government, it will forever alienate Chinese sympathies from anything we may propose."
Baron Sakatani from the first had nursed the ambition of being made currency adviser to the Chinese Government; by January, 1919, it appeared that his wish was to be fulfilled. The Japanese minister announced that the other nations had agreed to the Baron's appointment. I had not agreed to it. I had heard nothing whatever about it and had consistently and energetically opposed any action of this sort. I considered that it would permanently determine the course to be taken with regard to currency loans, and would preclude the possibility of any consultation with the United States. I requested the Minister of Finance to defer the appointment until I could consult my government. The next development came on the 20th when the Japanese minister handed me a memorandum which referred to the personal goodwill I had expressed to Baron Hayashi and which went on to state that the proposed appointment of Baron Sakatani had been sanctioned by Mr. Lansing in Washington.
I cabled to Washington, receiving therefrom on the 30th instructions saying that the appointment of a currency adviser should be settled only after full consultation by all concerned, and that Mr. Lansing had not committed himself to any other understanding. I sent a note to the Minister of Finance, stating that as one of the parties to the Currency Loan Agreement, the United States wished that action be postponed until further consideration could be given. I was immediately assured that the position taken would be considered as final. As a personal friend I regretted that Baron Sakatani could not be retained, but in so important a matter it was impossible to stand aside while action was rushed through which would be prejudicial to the long-established interests of the powers who were, at the time, preoccupied with after-war problems.
BANDITS, INTRIGUERS, AND A HOUSE DIVIDED