693.001/428
The Japanese Minister for Foreign Affairs (Arita) to the American Ambassador in Japan (Grew)
Excellency: I have the honor to inform Your Excellency that I have carefully perused the contents of Your Excellency’s note no. 1076, dated October 6th, addressed to the then Minister for Foreign Affairs Prince Konoye, concerning the rights and interests of the United States in China.
In this note, Your Excellency sets forth, on the basis of information in the possession of the Government of the United States, various instances in which Japanese authorities are subjecting American citizens in China to discriminatory treatment and are violating the rights and interests of the United States.
The views held by the Japanese Government with regard to these instances may be stated as follows:
1. According to the information in the possession of the Imperial Government, the circumstances which led to the adoption of such measures as those at present enforced in Tsingtao concerning export exchange, and the present situation being as set forth below, it is believed that those measures cannot be construed as constituting any discrimination against American citizens.
A short time ago the Federal Reserve Bank of China was established in North China. This bank’s notes, with foreign exchange value fixed at one shilling and two pence to one yuan, already have been issued to an amount of more than one hundred million yuan, and are being widely circulated. These bank notes being the legal currency required by the Provisional Government, the maintenance of their value and their smooth circulation is regarded as an indispensable basis for the conduct and development of economic activities in North China. Since the Japanese Government has, therefore, taken a cooperative attitude, all Japanese subjects are using those notes, and accordingly, even in their export trade are exchanging them at the rate of one shilling and two pence. On the other hand, the former legal currency still circulating in these areas has depreciated in exchange value to about eight pence per yuan. Consequently those who are engaged in export trade and are using this currency, are enjoying improper and excessive profits, as compared with those who are using Federal Reserve notes and carrying on legitimate transactions at the legally established rate of exchange. Japanese subjects and others [Page 798] who are using Federal Reserve notes have been suffering unreasonable and excessive losses as compared with those persons who use exclusively the former legal currency although residing and carrying on their businesses in the areas under the jurisdiction of the Provisional Government of North China. Furthermore, the existence of the above mentioned disparity between the foreign exchange value of the Federal Reserve notes and that of the former legal currency, which currency the Federal Reserve Bank has been and is exchanging at a rate almost on a par with its own notes, is bound to exert an unfavourable effect upon the exchange value of the Federal Reserve notes, and eventually also upon the exchange value of the Japanese yen. The Japanese Government therefore can not remain indifferent to such a situation. In order to place the users of the former legal currency who have been obtaining improper and excessive profits on an equal footing with those using the Federal Reserve notes and at the same time to assist in the maintenance of the exchange value of the Federal Reserve Bank notes, represents an objective of those export exchange measures adopted at Tsingtao. Inasmuch as the application of the measures makes no differentiation according to nationality they are not at all discriminatory. As a matter of fact, it is through these measures that those users of the Federal Reserve notes who had in a sense been discriminated against have been placed on an equal footing with the others, and thus, for the first time on equal footing, are enabled to compete on an entirely equitable basis.
2. Some time ago the new régimes in North and Central China revised the Customs tariff rates seeking to secure a rational modification of the former tariff rates enforced by the Nationalist Government, because those rates were unduly high and not suitable for the promotion of the economic recovery and general welfare of the Chinese people. In any case, the schedule adopted is the one that was readily approved by the Powers in 1931, and was not calculated to inure to the benefit of any particular country. Accordingly no complaint has been heard from foreign residents of any nationality in China. The Japanese Government is, of course, in favour of the purpose of this revision, and believes that it will serve to promote effectively the trade of all countries with China.
3. As for the organization of certain promotion companies in China, the restoration and development of China’s economic, financial and industrial activities following the present incident is a matter of the most urgent necessity for the welfare of the Chinese people. Moreover, the Japanese Government, for the sake of the realization of a new order in East Asia, is exceedingly anxious for the prompt inauguration and progress of undertakings looking toward such restoration and development, and is devoting every constructive effort to [Page 799] realize this objective. The fact that the North China Development Company and the Central China Promotion Company were established represents nothing other than an offer to China of the necessary assistance for this restoration, and at the same time, an attempt to contribute to the development of the natural resources of China. It does not in any way impair the rights and interests of nationals of Your Excellency’s country or in any way discriminate against their enterprises. The Japanese Government therefore, of course, has no intention of opposing, but rather welcomes heartily, the participation of third Powers which intend to cooperate on the basis of the new conditions.
The telecommunication companies in North and Central China, the inland navigation steamship company at Shanghai and the wharfage company at Tsingtao have also been established to meet the imperative need of an early restoration of communications, transportation, and harbor facilities which were destroyed as a result of the incident. It is proper that the telecommunications enterprise, not only because of its nature as a public utility but also in view of its relation to the maintenance of peace and order and to national defense, should be undertaken by special companies. However, all other enterprises being ordinary Chinese or Japanese juridical persons, do not have the objectives of discrimination against Your Excellency’s country or third powers or of the gaining of monopolistic profits. As regards the wool trade, while the control of purchasing agencies was enforced in the Mongolian region, it now has been discontinued. There is at present no plan of any sort for the establishment of a tobacco monopoly.
4. Concerning the return of American citizens to the occupied areas, in North China there is no restriction on their returning, except in special cases where the personal safety of those who return would be endangered. Your Excellency is aware that in the Yangtze Valley large numbers of Americans have already returned. The fact that permission to return has not yet been made general is, as has been repeatedly communicated to Your Excellency, owing to considerations of the danger involved on account of order not yet being restored, or because of the impossibility of admitting nationals of third Powers on account of strategic necessities such as the preservation of military secrets. Further, the various restrictions enforced in the occupied areas concerning the residence, travel, enterprise and trade of American citizens, constitute the minimum regulations possible consistent with military necessities and the local conditions of peace and order. It is the intention of the Japanese Government to restore normal conditions as soon as circumstances permit.
[Page 800]5. The Japanese Government is surprised at the allegation that there exists a fundamental difference between the treatment accorded to Japanese in America and the treatment accorded to Americans in Japan. While it is true that in this period of emergency, Americans residing in this country are subject to various economic restrictions, these restrictions are, needless to say, imposed not upon Americans alone but also equally upon all foreigners as well as upon Japanese subjects. A statement of the views of the Japanese Government concerning the opinion as set forth in Your Excellency’s note, regarding the treatment of Japanese subjects in American territory, is reserved for another occasion.
While the Japanese Government with the intention of fully respecting American rights and interests in China, as has been frequently stated above, has been making every effort in that direction, in view of the fact that military operations on a scale unprecedented in our history are now being carried out in East Asia, I am of the opinion that the Government of Your Excellency’s country also should recognize the fact that occasionally obstacles arise hindering the effecting of the intention of respecting the rights and interests of Your Excellency’s country.
At present Japan, devoting its entire energy to the establishment of a new order based on genuine international justice throughout East Asia, is making rapid strides toward the attainment of this objective. The successful accomplishment of this purpose is not only indispensable to the existence of Japan, but also constitutes the very foundation of the enduring peace and stability of East Asia.
It is the firm conviction of the Japanese Government that now, at a time of the continuing development of new conditions in East Asia, an attempt to apply to present and future conditions without any changes concepts and principles which were applicable to conditions prevailing before the present incident does not in any way contribute to the solution of immediate issues and further does not in the least promote the firm establishment of enduring peace in East Asia.
The Imperial Government, however, does not have any intention of objecting to the participation in the great work of the reconstruction of East Asia by Your Excellency’s country or by other Powers, in all fields of trade and industry, when such participation is undertaken with an understanding of the purport of the above stated remarks; and further, I believe that the régimes now being formed in China are also prepared to welcome such participation.
I avail myself [etc.]
- Translation as prepared by the American Embassy in Japan; it contains corrections and additions to the translation furnished by the Japanese Foreign Office. For the translation furnished by the Japanese Foreign Office, see Department of State, Press Releases, November 19, 1938 (vol. xix, No. 477), p. 350.↩