893.6363 Manchuria/31
The Secretary of State to Mr. A. G. May of the Standard-Vacuum Oil Company
Dear Mr. May: We have received your letter of August 8, 1934,21 giving the Department certain information which had come to your attention in connection with the proposed establishment of an oil monopoly in Manchuria.
Among other things you state that the Standard-Vacuum Oil Company may be asked to submit to the proposed oil monopoly quotations on crude oil and that you intend to submit such quotations, feeling that such action would not weaken your position or the position of the American Government in the matter of protest against the unequal treatment which would be accorded you in Manchuria and Dairen if the proposed monopoly should be established. In the concluding paragraph of your letter you also state that you would appreciate being informed in regard to the results of the representations which the American Ambassador at Tokyo made some weeks ago.
With regard to the question of your submitting to the proposed oil monopoly quotations on crude oil, it is believed that you will realize that it is difficult for the Department to comment. The most [Page 725] logical course of action open to the Department in attempting to protect American interests established in Manchuria against monopolies is to endeavor to persuade the Japanese authorities, and through them the “Manchukuo” authorities, to recognize and observe the treaty provisions under which such American interests have become established in Manchuria, with particular reference to Article III of the Nine-Power Treaty, and the provisions in the Sino-American Treaty of 1844 and the Sino-French Treaty of 1858 against the establishing of monopolies in China. However, the Department realizes that you and the other American oil companies established in Manchuria are faced with a practical situation which threatens serious impairment of your established interests in Manchuria and the Department is not inclined to advise against any practical steps that you might decide to take to meet an emergency thus involving your interests. It would appreciate, however, being kept informed of any such steps that you may take.
With regard to the representations made by the American Embassy at Tokyo, it may be stated for your confidential information that the reply of the Japanese Government, under date August 2, 1934,22 in substance (a) confirms the fact that the “Manchukuo” authorities have in contemplation a law for the control of the oil industry in Manchuria, (b) denies that the Manchuria Oil Company has, under existing law, been granted monopolistic rights, and (c) denies that the investment by the South Manchuria Railway Company in the Manchuria Oil Company gives rise to any question of infringement of existing treaties. It is understood that the British Ambassador at Tokyo received an essentially similar but not identic reply, also under date August 2, 1934, to representations which he made, under instructions from his Government, on behalf of British oil interests in Manchuria. The Department is making a study of possible further courses of action in the light of additional comment recently received from the American Ambassador at Tokyo.
Sincerely yours,
Chief, Division of Far Eastern Affairs