Office of the Historian

893.6363 Manchuria/40: Telegram

The Minister in China (Johnson) to the Secretary of State

Peiping, August 28, 1934—1 p.m.
[Received 2:20 p.m.]

387. Legation’s 354, August 11, noon. Following is résumé of pertinent parts of recent despatches from Consul, Mukden: [Page 726]

1.
During past month there have been signs of modification of monopoly program which is reported to have been originally conceived without prior approval of the Japanese Government by Hashimoto, who is a director of the Nippon Oil Company and president of the Manchuria Oil Company and leading spirit in the oil monopoly and a brother-in-law of General Hishikari, Commander in Chief of the Kwantung Army and Japanese Ambassador to “Manchukuo”.
2.
Subsequent to the publication of the above information, and protests by the American and British Governments, the scheme had been held up and ban placed on press news regarding subject. Indications are that “Manchukuo” authorities wish to reach direct agreement with foreign interests possibly upon quota basis similar to that now in force in Japan and Korea.
3.
Local manager of the Standard-Vacuum Oil Company views with suspicion the desire of the “Manchukuo” authorities for direct conversations and feels that in view of apparent success of previous representations at Tokyo further efforts should be made through Japanese authorities.
4.
However, Chase23 concurs with his British colleague that: (a) the fact is [that?] important officials of the Oil Monopoly Bureau are also Nippon Oil Company officials, together with the relationship between Hashimoto and Hishikari, makes it appear possible that there may be less of a national defence policy and more of a private interest behind the monopoly than has hitherto appeared probable; which fact should make opposition to the monopoly easier provided face-saving does not become involved, (b) that direct conversations between oil companies and “Manchukuo” authorities might be productive of the results provided it is clearly understood that the treaty position of the companies will not be affected and provided further that suitable negotiators are available, (c) that it is considered efforts to hasten economic development in Manchuria will increase total demand for oil to an extent partially compensating companies for decreased proportional share of trade.
5.
In view of the above Chase suggests that the situation calls for, (a) prompt agreement between foreign firms concerned on common plan of action and size of quota to be sought, and (b) appointment and despatch to Manchuria of qualified negotiators as soon as actual intentions of Tokyo and Hsinking are definitely clarified.
6.
Legation’s 368, August 20, 6 p.m. Chase reports available trustworthy information as indicating that this action has no connection with oil monopoly but is due to tension between Japan and Russia. He cites also announcement of “liquidation sale” by “The Foreign [Page 727] Products Company”, a store in the Japanese railway settlement, which has been handling general lines of Soviet products.
7.
This has not been repeated to Tokyo as copies of despatches upon which it is based have been sent directly to Tokyo.

Johnson
  1. Augustus S. Chase, Consul at Mukden.↩