Rising Sun Companies 3.boss.0001 Louis J. Sheehan, Esquire

http://rpc.technorati.com/rpc/ping

THE "MAGIC" BACKGROUND OF PEARL HARBOR

596. President Wang Takes Active Part in Japanese-American Negotiations

As Nanking's various economic and political situations grew to international importance because of their relation to Japan, President Wang increased his interest in the progress of Japanese-American relations. In a letter to Prime Minister Konoye sent in October, 1941, via Consul-General Hidaka, Mr. Wang asked for information regarding this matter. In his message Mr. Wang summarized diplomatic conversations among Mr. Hidaka, Admiral Koga and himself in relation to the United States.

A later dispatch on October 16, 1941 revealed that President Wang's motives regarding this problem were governed by the desire to have the Nanking government officially consulted in any agreement reached with Washington. Actually Mr. Wang wanted Nanking to be part of any alliance between Japan and the United States. Tokyo found Mr. Wang's demands justifiable, and Japan agreed to contact Nanking on all future details involving occupied China.[1410]

[1410] III, 1109.

[287] [288 blank]

THE "MAGIC" BACKGROUND OF PEARL HARBOR

PART C—JAPANESE DIPLOMATIC ACTIVITIES THROUGHOUT THE WORLD

(m) Japanese Netherlands East Indies Relations

597. Zoku Nomoto Instructs Telegraphic Clerks in New Code Systems

During August Japan enforced stricter measures to safeguard the secrecy of its plans. Since these additional security precautions had resulted in more complicated code and telegraphic duties, Mr. Yutaka Ishizawa, the Japanese Consul-General, in Batavia suggested on August 6, 1941 that Mr. Zoku Nomoto be permitted to remain in that city for a few months in order to instruct Mr. Yamaguchi and other telegraphic clerks in the new Japanese code systems. Mr. Ishizawa urged that his government be prepared for any emergency.[1411]

Later in the month Japanese offices throughout the world were furnished with the new code which Mr. Nomoto was teaching to Japanese communicators in Batavia since it was replacing the old code.[1412]

598. Japanese Finance Officials Negotiate for Circulation of Japanese Currency

Since the circulation of Japanese funds had been greatly curtailed by the Netherlands Indies freezing order, Mr. Masatsune Ogura, the Japanese Minister of Finance, and the authorities of the Yokohama Specie Bank were anxious to conclude some agreement with the Netherlands government. With this goal in mind, Tokyo intended to have Mr. Imagawa, a Japanese member of the Yokohama Specie Bank in Batavia on this trade mission, present certain of Japan's problems to the Dutch officials.[1413]

To regain some semblance of its former trade with the Netherlands East Indies, Japan was particularly anxious that an account designated as the "A" account be restored. However, since the Netherlands Indies had already established the Central Afolh Japan Trade, Tokyo was not optimistic concerning the realization of its plan. Attempting to clear up back shipments of goods, Tokyo directed its ships to load the cargo already contracted for up to and including August 1, 1941. As a reciprocal measure Japan was to fill orders made by the Netherlands East Indies prior to that date.

The present trade situation existing between the two countries could not be termed beneficial to the Japanese government because the Netherlands authorities only issued permits for the purchase of such goods as the Dutch government was willing to sell. Since the payment of goods in guilders protected the buyer from exorbitant export duties, the Tokyo commercial officials suggested that the payment of the petroleum costs be made in this way. To accomplish such a plan the Mitsui Company conducted negotiations in Tokyo with two Batavian officials.[1414]

599. Mr. Imagawa Discusses Japanese Currency Problems With Mr. Hoogstraten (August 7, 1941) Attempting to establish Japanese currency in the Netherlands East Indies on a more stable

basis in spite of the freezing order, Mr. Imagawa and Mr. Kotani met in a conference with Mr. Hoogstraten and Controller Purena on August 7, 1941.[1415] At this meeting Mr. Hoogstraten, speaking in an official capacity, stated that his government would liquidate all of Japan's frozen assets with the exception of a small amount to cover the losses sustained by Indonese merchants provided that the newly liquidated assets be used as payment for the purchase of materials in the Netherlands East Indies. Furthermore, Mr. Hoogstraten stated that even that money which was to remain frozen for the time being would be eventually liquidated. At a

[1411] III, 1110.
[1412] III, 1111-1112.
[1413] III, 1113.
[1414] Ibid.
[1415] III, 1114.

[289]

future conference details concerning the settlement of frozen assets through bahts or Shanghai dollars would be considered. In return for the concessions which the Dutch government was willing to make, Mr. Hoogstraten requested that he be notified of the extent to which Japan would export merchandise to the Netherlands East Indies in the future. If reciprocal measures were adopted, the Netherlands government promised to keep Japan informed on the maximum amount of East Indies goods it would be permitted to purchase.[1416]

Speaking of the difficulties encountered by Dutch firms in Japan, Mr. Hoogstraten reminded the Japanese representatives that these merchants had contracted for approximately Y180,000,000 in Japanese goods before the retaliatory freezing order was put into effect by Japan. Between fifteen and twenty million yen had been paid on these goods, but only cargoes amounting to Y3,000,000 had been loaded for shipment to the East Indies. Since Mr. Imagawa's and the Dutch bank official's figures differed, the amounts stated were to be checked and reported on.[1417]

Realizing that the purchase of petroleum was of prime importance to Japan, Mr. Hoogstraten dealt at great length on the conditions effecting its export from the Indies. Japan already owed between one and two million United States dollars for petroleum purchased and to expedite its payment, the Dutch government was willing to liquidate some of the frozen Japanese funds. As an added assistance to future negotiations, the local exchange branch which had formerly refused permission to the Yokohama Specie Bank for new payments on petroleum, was now willing to grant this privilege. These advance payments for exports were to be placed in a special "C" account. Moreover Dutch authorities decided to permit the local branch of the Specie Bank to use the funds on hand, known as the "B" account, to make payments to exporters and to engage in domestic enterprises. Netherlands officials further agreed that about thirty or forty guilders could be liquidated from the old "A" account while a new "D" account was being established at the Specie Bank, from which the exporter would draw the advance payments already agreed upon. By the conclusion of the conference, Mr. Hoogstraten and Controller Purena had unofficially guaranteed to maintain a status quo in the exchange market.[1418] From the report of the Japanese officials who had attended the conferences in Batavia, it would appear that the Dutch were equally desirous of disposing of the various commercial problems which resulted from the Netherlands freezing order. Therefore, Tokyo was asked to give the Dutch banks and merchants any necessary permits that would enable them to transact business with the Japanese.[1419]

600. Second Trade Conference Ends in Disagreement Over Japanese-Dutch Contracts (August 8, 1941)

On August 8, 1941, Japanese and Dutch commercial officials held a second conference. Returning to the discussion of Dutch trade transactions in Japan, Mr. Hoogstraten, Chief of the Netherlands Commercial Bureau in Batavia, stated that Netherlands companies had already contracted for goods in the excess of Y190,000,000 on which Y3,000,000 had already been paid. Since both these sums were large, Mr. Kotani and Mr. Imagawa, the chief officials resenting Tokyo in trade negotiations, decided that the figures must be checked more closely. However, Mr. Hoogstraten insisted that, according to a message from the Netherlands Consul-General at Kobe, orders amounting to over Y50,000,000 had passed over his desk, in that city alone.[1420]

[1416] Ibid.
[1417] Ibid.
[1418] Ibid.
[1419] Ibid.
[1420] III, 1115.

[290]

THE "MAGIC" BACKGROUND OF PEARL HARBOR

After listening to Mr. Hoogstraten's quotation of Dutch trade transactions with Japanese merchants, Mr. Kotani and Mr. Imagawa reiterated their belief that the sums quoted were too large to be considered feasible.[1421]

601. Dutch Indecision on Petroleum Exports Delay Japanese Tankers

Since the Netherlands East Indies authorities had not taken an official stand on Japanese payment of petroleum exports by August 18, 1941, Tokyo resorted to information contained in an intelligence report from the Japanese Fuel Bureau.[1422]According to a message which arrived at the Mitsui Company in Tokyo from the branch in Batavia, the Netherlands East Indies government had decided to refer this freight question involving the Zuiyo Maru, Teiyo Maru and San Diego Maru, en route to the Netherlands East Indies, to the New York Purchase Permit Control board.

However, when the Mitsui Company in Batavia demanded that New York furnish the permit necessary for the exportation of crude oil, it was informed that for the present no permits would be issued. Therefore because the Yokohama Specie Bank and the Mitsui Company could not obtain duplicated permits, Tokyo was forced to postpone the sailing of the three tankers pending further action by the Netherlands East Indies government.[1423]

602. Japan Published Conversations with Finance Authorities

Even though the Netherlands government had already taken strong economic measures against the Japanese, the government at Tokyo realized that more effectively damaging restrictions might still be passed by the Dutch. Early in August 1941 Mr. Ishizawa informed Foreign Minister Toyoda that the Netherlands East Indies regulation froze only Japanese funds and not the assets while the retaliatory order issued by Japan froze both the funds and the assets of the Dutch. In order then, to offset the enactment of a stronger freezing measure by the Netherlands government, Mr. Ishizawa urged that Foreign Minister Toyoda assure Minister Pabst that Japan's freezing order would not be applied to Dutch assets.[1424]

As the result of Mr. Ishizawa's suggestion, Foreign Minister Toyoda decided to lighten the restrictions on the activities and reports made for the purpose of controlling the transactions among the foreigners interested in Holland and Dutch East Indies commerce. Therefore Foreign Minister Toyoda published the conversations with the Finance Department authorities and on August 8, 1941 put into effect the results of this conference.[1425]

603. Native Indonese Leaders Pledge Support to Netherlands Government

Not only by official economic restrictions but by a new strengthening of its own internal unity the Netherlands East Indies sought to impede further Japanese aggression. At a meeting of the Gerindo Party on August 4, 1941 the native population suggested open opposition to Japan's New Order in East Asia, and proposed forbidding any Japanese to enter the islands. According to Kubangunan,[1426] the native language newspaper, native leaders were convinced that this was the time for cooperation with the Netherlands government.[1427] In a report of this native activity sent to Tokyo on August 10, 1941 Mr. Ishizawa stated that the Dutch government bolstered native morale and loyalty by praising the capabilities of their organization and troops.[1428] Nevertheless realizing that the Netherlands government's system of conscrip-

[1421] Ibid.
[1422] III, 1116.
[1423] Ibid.
[1424] II, 1123.
[1425] III, 1117.
[1426] Kana spelling.
[1427] III, 1118.
[1428] Ibid.

[291]

ting natives on the islands remained a possible obstacle to complete cooperation between the Dutch factions, Mr. Ishizawa urged that Tokyo pay close attention to this question in hopes of using the natives for advancing Japanese propaganda among the islanders.[1429]

But less than a week later at a national conference held to draft proposals for discussion at a future meeting, six hundred members of the Gerindo Party voted that Japan's alliance with Nazi and Fascist nations as well as its aggressive actions against China and French Indo China constituted a threat to the Netherlands East Indies and the entire South Seas area. Although this native party, composed of ten thousand people from the lower and working classes, had been opposed to the Netherlands East Indies government with the result that many of its leaders had been banished, it now resolved to align its efforts with the Netherlands East Indies government in forming a popular democratic front embracing all Indonesia. Furthermore, the Gerindo party intended to arouse the rest of the population to the necessity for complete unity by establishing a volunteer army.[1430]

604. Japan Proposes Reciprocal Financial Guarantees

On August 11, 1941 the Japanese government instructed its officials in Batavia to forward certain reciprocal agreements which Japan would make if the Netherlands East Indies permitted Japanese business houses and individuals on the islands to make use of the newly created "D" account for payments on exports, particularly of petroleum.[1431] Under this proposed program of financial reciprocation the Japanese government would attempt to evolve some plan for placing Dutch funds on deposit in Japanese currency at Tokyo. In the hope of realizing the adoption of such a financial agreement Foreign Minister Toyoda asked that Mr. Imakawa negotiate for the permits necessary to transfer Japanese money to the "D" account. The Japanese government wished that the Netherlands government allow the depositing of profits gathered through Japanese enterprises in the Netherlands East Indies into this "D" account in the same manner.

While these negotiations were under way, the utmost secrecy was to be observed in order to prevent Japanese nationals residing in the East Indies from learning of Tokyo's plans.

From previous conversations held between Japanese and Dutch officials in Batavia, the Japanese government realized that the Netherlands authorities were indignant over the losses inflicted upon Dutch merchants in Japan by the Japanese control order of July 7, 1941. To counteract this argument against cooperation with Japan, Foreign Minister Toyoda suggested that the Japanese officials in Batavia investigate the losses sustained by Japanese nationals as a result of the new Netherlands East Indies licensing system and to use the results of their findings as reasons for Japan's attitude in the trade negotiations.[1432]

605. Japanese Officials Meet with Mr. Hoogstraaten in Fourth Trade Conference (August 12, 1941)

After receiving this reciprocal financial proposal from Tokyo,[1433] Mr. Ishizawa, assisted by Mr. Kotani and Mr. Imagawa, conferred with Mr. Hoogstraaten for three hours on August 12, 1941.[1434]

Before discussing Japan's proposed agreement, Mr. Kotani emphasized certain points connected with the recent Netherlands Indies freezing order. Ostensibly the purpose of this restriction was to cover the Y190,000,000 loss on contracts already drawn up with the Japanese and the 12,000,000 guilders of freight paid for by Dutch merchants in Japan but never delivered.

[1429] Ibid.
[1430] III, 1119.
[1431] III, 1120.
[1432] Ibid.
[1433] Ibid.
[1434] III, 1121.

[292]

THE "MAGIC" BACKGROUND OF PEARL HARBOR

Because there was a great difference between the trade statistics of the Netherlands and those of Japanese Commercial officials, Mr. Kotani felt that it was absurd to continue the enactment of a freezing order on the basis of inaccurate evidence. Therefore, the Japanese officials asked that the Netherlands freezing act be revoked.

Furthermore Mr. Kotani pointed out that not only had the Netherlands East Indies government abolished the old exchange agreement existing between the Japanese and the Dutch, but it had neglected to conclude a new agreement as it had formerly promised. Even when the Japanese government attempted to meet the Dutch export license system, the Netherlands East Indies government continued to regard Japan with suspicion, automatically assuming that by the advance into French Indo-China the Japanese were actually threatening the integrity of the Netherlands East Indies.

But although he remained convinced that Japan's recently acquired bases imperiled Indonese defenses, Chief Hoogstraten admitted that the figures stating the losses of the Dutch merchants through trade transactions with the Japanese were inaccurate. However, assuring Mr. Ishizawa that he had not misquoted these figures with any malicious intention, Mr. Hoogstraaten explained that he had merely made use of the trade figures at hand.

At this point in the conversation, Mr. Ishizawa described the reciprocal plan which the Japanese government intended to offer the Netherlands East Indies in exchange for the permission to transfer deposits of Japanese business houses and individuals to the "D" account in the Yokohama Specie Bank for use as advance payments on certain exports and on petroleum shipments. Although he could not make any definite statement until the Netherlands East Indies government had decided its policy regarding the export license system, Mr. Hoogstraaten assured the Japanese Consul that his government would give the plan careful consideration.[1435]

606. Thaiese Consul-General Visits Mr. Ishizawa

During a conference with Mr. B. C. Cheeppensock on August 12, 1941 Mr. Ishizawa commented on the Indonese newspaper attacks against Japanese pressure in Thailand. Because Mr. Ishizawa recognized the danger of this propaganda, he, himself, had denied the rumors at every opportunity and he questioned Mr. Cheeppensock concerning similar rumors in Thailand. Mr. Cheeppensock stated that three code messages just received from the Chief of the Bangkok Intelligence Bureau were evidence that Thailand was maintaining its neutrality policy and that it had received no demands whatever for military bases from any country.

When Mr. Ishizawa suggested that this information be made known to the Netherlands Indies press, Mr. Cheeppensock replied that he intended to inform both the press and the Netherlands Indies government. Since Japanese relations with Thailand had already produced a decisive effect on negotiations with the Netherlands Indies, Mr. Ishizawa requested that Tokyo inform him of the official attitude to be taken toward Bangkok.[1436]

607. Dutch Firms Complain of Japanese Trade Practices

Foreign Minister Toyoda reported to Japanese officials in Batavia that on August 12, 1941 Mr. Pabst, the Netherlands Minister to Tokyo, complained that Japanese firms were selling to export regulatory organizations certain articles which had been promised to Dutch merchants. As a result, the Dutch merchants would possibly be unable to load their ships to the capacity originally reserved for them. Therefore, in lodging an official complaint, Mr. Pabst requested that the Japanese government end this trade practice. If these export regulatory organizations and development companies had already purchased these articles, the Netherlands Minister

[1435] III, 1121.
[1436] III, 1122.

[293]

asked that they be resold to the Dutch merchants to enable them to carry out the terms of their agreement with Japanese guilds.

On August 14, 1941 a Japanese official in charge of this matter strongly insisted that it was highly improbable that Japanese merchants resold their articles to export organizations in violation of their contracts. If, however, such trade practices had taken place, the Japanese Trade Bureau intended to warn the organizations against continuing them.

Nevertheless, it was pointed out that when Dutch merchants failed to take over those articles contracted for, even after paying for them, the Japanese merchants held the right to cancel the transaction and freely dispense of the merchandise in question. Since there would be an increasing number of cases in which the Dutch merchants would be unable to take over certain articles, Japan wished that the Netherlands government be informed that the Japanese firms were permitted unrestricted disposal of those articles. If the Dutch merchants then wished to repurchase the material that had been sold to the export organizations by the Japanese merchants, they would be forced to pay new prices. The Japanese government refused to order small export businesses to resell these articles to Dutch merchants under the old price level.

As a solution to this trade difficulty, Foreign Minister Toyoda suggested that an agreement be drawn up in Batavia providing for a conversion of Japanese funds amounting to 80,000,000 yen. These converted funds would be then used for the payment of Netherlands East Indies products. After the question of Japanese finances in the East Indies had been settled, the Japanese government promised to act on the question of the 20,000,000 yen which the Netherlands East Indies wished to use for making purchases from Japan.[1437]

608. The Netherlands East Indies Prepares for War

On August 14, 1941 Japanese intelligence sources in Batavia reported that the Netherlands East Indies government was making preparations for war.

To facilitate the commandeering of certain essential items by the military authorities, the Indonese government ordered that all automobiles used by the people of Batavia be registered. Similar investigation was made of the number of horses available.[1438]

In case of invasion by an enemy, the Netherlands East Indies ordered that anything of value be demolished or burned. Specified persons were assigned to take charge of the destruction of all villages and towns within the rice producing areas of Java, and to burn all unhulled rice in this vicinity. Rice mills, bean processing plants, coconut processing plants, iron mills and petroleum refineries were to destroy their machines and any products being held in storage.

In order to facilitate the evacuation of inhabitants, the East Indies was divided up into three areas:

(1) Fighting areas—the evacuation of inhabitants from the areas where fighting was most likely to occur had already been completed;

(2) Possible areas in which military activities might be conducted—preparations were still underway for handling the evacuation of inhabitants from areas in this category.

(3) Non-combat areas—the Netherlands East Indies foresaw no need to evacuate inhabitants from this area.

Although the Netherlands East Indies government did not require the withdrawal of residents from any of these areas until it became absolutely necessary, it had no intention of prohibiting voluntary evacuation.[1439]

[1437] III, 1123.
[1438] III, 1124.
[1439] Ibid.

[294]

THE "MAGIC" BACKGROUND OF PEARL HARBOR

609. Japan Seeks Ratification of Mining Agreement

For convenience in handling wires from the B. O. M., a Japanese concern in the Netherlands East Indies, Tokyo requested on August 14, 1941 that its messages be sent directly to the Fuel Bureau because the South Seas Industrial Company was dissolved and its functions taken over by the Imperial Petroleum interests. In view of its new responsibility, the Fuel Bureau requested that this Japanese concern report on the progress made in securing permits for future prospecting and mining after the expiration of the present mining contract, and the possibility of securing rights for the operation of machines used in drilling. The Fuel Bureau believed that the B.O.M. should transport the petroleum from the Sapt Company operating in Timor on schedule. However, the B.O.M.'s opinion on the advisability of this action was requested. Finally, the Japanese Fuel Bureau asked for a full report on the desirability of scheduling an evacuation of Japanese employees residing in Soerabaja.[1440]

Three days later, the B.O.M. summarized the prospects for continuing the exploration and exploitation of East Indies mines. In a written request to the head of the Bureau of Mines, on August 11, 1941 Japanese officials of this company had asked permission to exploit new mine areas.[1441]

In view of the strained relations between Japan and the Netherlands East Indies however, the Director of the Bureau of Mines replied on August 14, 1941 that the signing of a mine agreement between Japan and Batavia was impossible. Nevertheless, the Japanese firm representatives requested an audience with the Batavian director on August 16, 1951. However, although the Netherlands East Indies apparently had no strong objections to signing a mining agreement, Dutch officials insisted that unsatisfactory Japanese-Dutch trade relations made the ratification of such an agreement impossible. In fact, for the present, the Netherlands government even believed it necessary to postpone reaching an agreement over the Sankuriran mines.

During the previous negotiations with the Dutch government, the Japanese official had attempted to bring about an agreement regarding the No. 1 "A" mine in Sankuriran but although the Japanese proposals governing this agreement had been submitted in June, 1941, as yet no reply had been forthcoming. While this delay might possibly have resulted from the fact that the Batavian Minister had been constantly traveling since its submission, the Japanese officials still doubted if the ratification of this mining agreement would take place.

Nevertheless, Mr. Ishizawa, accompanied by the Japanese mining officials, intended to confer with Mr. Hoogstraten in the near future. However, in view of these obstacles to the mining industry, the Japanese official requested that the new mining machinery not be sent in spite of the fact that the machinery in Soerabaya was already loaded for shipment to Batavia.[1442]

610. Mr. Ishizawa Confers with Mr. Hoogstraten on Petroleum Questions (August 16, 1941)

On August 16, 1941, Mr. Ishizawa conferred with Mr. Hoogstraten on the possibility of obtaining export permits for petroleum to be carried aboard the Mitsui Bussan's oil tankers, and for material being loaded on the IYO Maru for the Rising Sun Company. Mr. Hoogstraten wished to delay any decision on this question until August 18, 1941 when he would receive instructions from London and would be able to determine the attitude of the PRM and K companies. Furthermore, Mr. Van Mook was too ill at present to issue any instructions on this matter.[1443] In a special message to Mr. Keki, Manager of the Yokohama Specie Bank, Mr. Imagawa pointed out that if the petroleum were loaded from storage tanks within British ter-

[1440] III, 1125.
[1441] III, 1126.
[1442] Ibid.
[1443] III, 1127.

[295]

ritory instead of that under Netherlands control, the export permits could be secured from the Malayan government and the Netherlands East Indies would be powerless to act upon it. Mr. Imagawa emphasized this point.

In regard to the unpaid balances on the shipment of petroleum exports yet to be made, Mr. Purena, Chief of the Netherlands Control Board, suggested that Japan debts to the BPM, the Colonial and the Rising Sun Companies be paid by means of the deposits held in the Yokohama Specie Bank or the Java Bank. A detailed statement of the present balances on the petroleum accounts owed by Japan was to be submitted by the control officials on Tuesday, August 19, 1941. Mr. Imigawa asked that Mr. Seki study the advisability of paying petroleum bills in this manner. At the same time Mr. Imagawa reminded Mr. Seki that unless Japan consent to these conditions the Netherlands East Indies might suspend entirely the exports of petroleum in the future.

Because the Handels Bank played such an important part in these negotiations, the Batavian control director asked that Japan consent to the establishment of "free guilders" in the Netherlands East Indies' monetary exchange. Originally the Handels Bank was to have sent 350,000 ticals to Japan but since the foreign money dealers could not send more than 5,000 at that time, Mr. Purena suggested that Japan accommodate the Handels Bank with the additional 400,000 ticals. Mr. Imagawa was willing to consent to such a financial exchange provided that the Batavian control director guarantee Japanese merchants export permits for rubber and tin. Since the granting of such permits would naturally effect the whole export problem, Mr. Purena did not feel authorized to agree to this proposal.

But even though Controller Purena refused to guarantee export permits in return, Mr. Imagawa suggested that his government consent to the Dutch use of free guilders since there was always the possibility that Japanese banks in the Netherlands East Indies would be in a similar predicament sometime in the future without any means of relief. As a result of this request, a credit of 400,000 ticals was arranged at the Japanese Branch of the Handels Bank for rubber and tin. In order to avoid any delay in carrying out this financial arrangement, Mr. Imagawa asked that Mr. Ogura, the Japanese Finance Minister, make arrangements for the special transfer of this money. From the negotiations conducted so far, the Dutch government was unwilling to state its official position regarding the export of all commodities and therefore the Japanese officials anticipated difficulty in incidental negotiations such as the fundamental question of regulating barter exchange.[1444]

611. Mr. Imagawa Emphasizes Importance of Handels Bank Problem

Since it was generally felt in Tokyo that problems connected with the Handels Bank could be disposed of as soon as Japanese export permits were obtained from the Netherlands East Indies, the Yokohama Specie Bank urged Mr. Imagawa not to waste his efforts on this financial question.[1445] However, in his reply on the following day, Mr. Imagawa pointed out that the attitude of Netherlands East Indies officials toward the trade negotiations had grown constantly worse since the Japanese occupation of French Indo China and it did not seem likely that a satisfactory agreement could be reached on the exportation of such important raw materials as tin and rubber. If the Tokyo decided that an agreement on general terms was essential before considering any specific problems, stipulations for the securing of export permits from the East Indies would never be decided.

At the present time, Mr. Imagawa reported, the Japanese branch of the Mitsui Bank in Batavia was threatening to close down because of insufficient funds. Consequently the Handels Bank would close, complicating the Japanese banking system to such an extent that it would be impossible to dispose of any export problems. Although indignant at the attitude taken by

[1444] III, 1127-1128.
[1445] III, 1129.

[296]

THE "MAGIC" BACKGROUND OF PEARL HARBOR

Indonese officials, Mr. Imagawa still believed that the Japanese government would have to agree to a settlement of the Handels Bank question in order to liquidate a small amount of its frozen funds and use them to purchase Netherlands East Indies products.[1446]

In a later report on the Handels Bank officials, Mr. Imagawa revealed that unless a specific guarantee were furnished the Netherlands East Indies, oil companies would refuse to load oil on Japanese tankers even if the Netherlands government itself granted export permits. Apparently the Netherlands East Indies' real intention was to cancel the funds of the oil company frozen by Japan. Therefore, Mr. Imagawa advised that the Yokohama Specie bank continue to study this problem.[1447]

612. Dutch Merchants in Kobe are Dissatisfied

On August 20, 1941, Mr. Hoogstraten reported to Mr. Ishizawa that the Dutch merchants in the Osaka Kobe region of Japan were aroused over the treatment accorded them. Although Mr. Hoogstraten admitted that the Batavian Consul General, Pennink, might have exaggerated the situation, he nevertheless felt that the unfriendly attitude of both the Tokyo central authorities and the Japanese officials in Kobe had been a source of concern to the East Indian merchants. In attempting to smooth over this minor incident, Mr. Ishizawa promised that future trade negotiations in that area would be handled entirely through the Japanese legation.[1448]

613. Netherlands Indies Places Restrictions on Japanese Business

a. Suppression of Japanese Newspapers

Nevertheless retaliatory measures were taken against the Japanese on the islands by the Netherlands government. On August 21, 1941 local Batavian police arrested the editors of the Chinese language edition of the To-Indo Nippo and the Shinarusutan, two Japanese-subsidized newspapers, and suspended the printing of both papers for one week.[1449]

b. Java Prohibits Japanese-Language Phone Calls

On the same day Dutch officials in Java ordered that all telephone calls to and from the islands be made only in the Dutch, Malayan or English languages. Although Mr. Ishizawa had not yet learned whether this ban on the use of the Japanese language had been extended to other islands in the Indies, he asked that the Tokyo Foreign Office use its influence to have the order rescinded, since its effect on Japanese business in Java alone impaired Japanese trade as a whole.[1450] Louis J. Sheehan, Esquire