893.6363 Manchuria/120
The Ambassador in Japan (Grew) to the Secretary of State
[Received December 28.]
Sir: I have the honor to refer to previous correspondence on the subject of the petroleum monopoly in Manchuria and to report the following developments in the situation.
. . . . . . . . . . . . . .
In my despatch No. 1071, dated November 30, 1934,79 it was stated that the local representatives of the Standard-Vacuum Oil Company, the Rising Sun Petroleum Company, and the Texas Oil Company had recommended to their head offices that they refuse to quote on a lot of some 13,000 tons of crude oil which the Manchuria Oil Company wished to purchase. The Embassy is now informed that the head offices of the three companies have instructed their local representatives [Page 788] to state that their companies are not at present in a position to quote on the oil desired.
On November 27, 1934, representatives of the Standard-Vacuum Oil Company, the Asiatic Petroleum Company and the Texas Oil Company attended a conference called at Changchun by the officials of the “Manchukuo” Monopoly Bureau. The Embassy is informed that the Consul General at Mukden has reported the proceedings of the conference in full to the Legation at Peiping, sending copies of the report to the Department.80 The Monopoly officials, however, requested the foreign oil companies to reply by December 10, 1934, as to whether or not they would consent to supply the Monopoly with crude and refined oils, whether or not they could arrange among themselves for quotas of oils to be supplied to the Monopoly, and what, if any, equipment they wished to sell to the Monopoly. They were also asked to supply the Monopoly with the figures of their imports and sales of each kind of oil product for the past two years. After referring the matter to their head offices and consulting with officials of the Embassies concerned, the local representatives of the oil companies decided to instruct their Mukden representatives to reply simply to the effect that, owing to the difficult issues involved, their principals were not in a position for the present to supply the information requested. This attitude was adopted because important officials of the three companies are now conferring in Shanghai in regard to their future position vis-à-vis the Manchurian oil monopoly, and it was thought best to give a non-committal answer in order to gain time. Moreover, it was feared that a definite answer or a discussion of the various points involved might be intended to be construed as the opening of negotiations between the companies and the “Manchukuo” Monopoly officials, thus removing the negotiations from the plane of international policies and principles to one of simple commercial transactions. It has been obvious from the beginning of the discussions of the monopoly scheme that the Japanese authorities wished to draw the foreign oil companies into negotiations directly with the “Manchukuo” officials, apparently for the purpose of dissociating the practical issues from the diplomatic discussion of treaty rights and international principles, in order that they might eventually be in a position to inform the Governments concerned that the issues had been settled to the satisfaction of the parties interested and in this way to dispose of the diplomatic discussions. The oil companies, however, have steadily refused to be drawn into committing themselves in any way with the “Manchukuo” authorities.
Respectfully yours,