From: Washington. 
To: Tokyo.
21 July 1941

At the request of Acting Secretary of State Welles, Wakasugi called on him on the 21st. (The Ambassador is expected back in Washington tomorrow morning.) Welles said that he has been giving careful study to recent world conditions. He had asked Wakasugi to come to his office, he said, so that he could express the opinions reached by Secretary Hull and himself, in the light of recent world developments, regarding the unofficial discussions which have been taking place for the past several months between the Ambassador and Secretary Hull.

After thus prefacing his remarks, the Undersecretary said that the real objectives, set up by the Ambassador, Wakasugi, et al., of the Japanese-U. S. conversations, were identical to those towards which the Secretary was striving.

According to information received from various sources in various areas, he continued, there are definite indications that Japan is planning to take some steps very shortly which would upset the peaceful status of certain areas. If these reports are based on fact, he said, there would be a conflict between Japanese acts and the gist of the Ambassador's intentions expressed during the conversations.

Recently when the Ambassador met with him, Welles said, Japan's position was discussed. In the course of those conversations, the Ambassador claimed that Britain, the United States and other nations were applying the pressure on Japan, and described this as an "encirclement", of Japan. This expression is identical to that employed earlier by Germany, he pointed out.

As a matter of fact, the Undersecretary continued, the above was clearly a misunderstanding on the part of Japan, because the United

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States has no such intentions as those Japan apparently feels. It is because the United States wishes to maintain peace between the two countries that she has been continuing the talks.

He went on by saying that the advices received were to the effect that Japan would take the southern portion of French Indo-China by force within the next few days. Such an act would definitely be in violation with the spirit of the Japanese-U. S. conversations which are being conducted in behalf of maintaining peace on the Pacific.

That is the American viewpoint, he said, but would appreciate being advised of the Japanese viewpoint.

Wakasugi, therefore, replied that he was well aware of the fact that the Ambassador and the Secretary were conducting negotiations aimed at improving U. S.-Japanese relations, and that he, himself, prays that they will succeed. By "a reliable source of information", Wakasugi asked, did the Undersecretary mean the U. S. Embassy in Japan? To this, avoiding a clear answer, Welles merely replied that the report was an accurate one.

Wakasugi then said that he would relay the information contained in the report referred to the Ambassador. In the meantime, he said, he would like to make an inquiry, as one emanating purely from himself and one which in no way should be considered an official one. Assuming, Wakasugi said, that Japan is planning to make a move in the manner described by the Undersecretary in some direction what effect would that have on the U. S.-Japanese discussions which were being conducted?

Welles replied that such an act on the part of Japan would be in direct conflict with the spirit of the discussions. So saying, he implied that further discussion would be in vain. On the other hand, he continued, he had been lead to understand that the new Foreign Minister of Japan was a close friend of Ambassador Nomura. Moreover, in new of the fact that very little time has elapsed since the new Cabinet was installed, probably it had not decided upon any definite policy as yet. In view of this fact the United States would patiently await developments before taking any steps to halt the discussions.

Wakasugi told Welles that he would report this conversation to the Ambassador in detail, and withdrew.

JD-1:3937(D)                                     Navy Trans. 7-25-41 (X)