In accordance with your telegram No. 55,¹ I telephoned to you this morning. Before doing so I had a conversation with the Secretary-General. He was rather depressed, and depressing, even though he had seen the Reuter telegram from London that the Japanese had withdrawn troops behind Yalu and recalled its bombing squadrons. The Geneva negotiations were not going well and the Japanese were not moving an inch. He was then going to see Mr. Briand (I had also heard that Lord Reading² was also going) and perhaps there would be a meeting tonight.

I said I did not yet know if the Minister had yet sent the Notes to China and Japan but asked if he thought it would be helpful.³ According to the agreement at the Council table I had recommended that the Notes be sent but wondered how much it would matter now that at least four or five Powers had invoked the Paris Pact. He said he supposed it would help and that in any case it would please Washington. He had been told that Washington had suggested to South American States (possibly only those represented on the Council) that they should so act.

Mr. Ito informed me yesterday that the Japanese were withdrawing their opposition to the presence of an American observer at the Council. There has been no reply yet to the letter from Mr. Briand on the constitutional aspect.

The use of the word 'war' at the Committee of twelve is very much deprecated, especially by Mr. Briand. The same applies to any reference to the possibility of articles 15 and 16 of the Covenant being invoked. Lord Cecil has once or twice verged on this 'indiscretion', in trying to explain the Chinese attitude. But there is no doubt that the possibilities are in everyone's mind.

Having a few moments alone with Lord Reading the other day I asked if he felt free to give me an indication as to whether he believed the Japanese were prepared to go to extremities to maintain their Manchurian ambitions. He was most prudent, of course, but said there was a certain vital railway junction which, if occupied by the Japanese, would cause very grave misgivings. No move had yet been made towards it.

So far as can be estimated the Big Powers are honestly cooperating to preserve peace. There is always, however, the extent to which their interests diverge. I am not able to make a comprehensive report on that aspect, and, indeed, your perusal of the F.O. prints will have provided you with much information not available to me here. So far as I can add to it, however, by reporting conversations and even my impressions, I shall do so, even at the risk of being obvious. There was the impression during the September discussions of a certain detachment on the part of France. That may have been due to the absence of Mr. Briand. Since Mr. Briand took the chair he has certainly been unsparing in his efforts and his tremendous prestige and personal ability have greatly increased the strength of the Council. That prestige is now committed to securing a success, and any feeling that he gives a little more consideration to the Japanese than to the Chinese side may well be due to the fact that the problem lies in finding a formula for retreat acceptable to Tokio.

On Monday morning he referred to the useful influence which might be exerted on both parties by diplomatic intervention at Tokio and Nanking. Gilbert for a moment thought he was being referred to and said he would report to Washington. But Mr. Briand said that it was not the U.S.A. he was thinking of, and glanced towards his right, where Grandi and von Murtius were sitting.

Signor Grandi rarely intervened in the discussions. He himself came to Geneva but, on the other hand, his absence would have appeared very significant. His departure on Saturday night was fully justified. If we can judge from Monday morning's meeting Signor Scialoja will be less reserved. This note, as well as others, is to be taken as entirely objective.

The strict 'correctness' of the Italian applies also though not to the same extent, to the German representative. He is not, of course, Foreign Minister but the principal authority at Berlin on the Far East. You are aware of the three policies which find exponents in Germany. The one which the present Government is following is collaboration with France. What I might call the prophets of this policy envisage a development of economic cooperation aiming at an ultimate customs, if not political, union. In other words the resurrection of the Empire of Charlemagne. That seems to me a remote ideal but is not without its supporters among political and publicist personalities in Berlin. Economic committees have been set up in France and Germany to consider how economic cooperation may be developed. The British are said still to favour the closest economic relations between Paris and Berlin; and I have heard that Lord Reading's first official visit to Paris (a few weeks ago) was formally explained as not affecting in any way that policy. You will perhaps have more authoritative reports on this point from elsewhere.

The second policy open to Germany is to 'tighten their belts' and depend only on themselves.

The third, and the reason for my remarks, is the policy which favours a closer alliance with Russia. Carried to its logical conclusion this would most probably lead to war. At the present time it will, I think, be conceded that there is a very friendly relationship between Russia and Germany. And I have been told that the best information in the Secretariat is that Japan and Russia remain 'on excellent terms'. What that would amount to in the event of the present crisis developing, I do not, of course, know.

This 'thinking on paper' about some of the factors in the crisis is not to be taken as questioning for a moment the sincerity and completeness of German cooperation with the League. There is absolutely no hint of her wishing to fish in troubled waters and the policy of the present German Government is based on French help.

The reports that the Japanese are organising an 'independent' government in Manchuria receives a good deal of credence here.