893.6363 Manchuria/210
The Consul General at Mukden (Ballantine) to the Minister in China (Johnson)98
Sir: I have the honor to refer to my despatch No. 85 of April 24, 1935, and previous despatches concerning the oil monopoly, and to report that Mr. Yoshizawa, who has been for the past two years Japanese Consul General in Hsinking, and has recently been assigned to the Japanese Embassy in Washington, called Sunday on both my British Colleague and myself. Although both conversations were of general nature, Mr. Yoshizawa specially inquired of both Mr. Butler and myself whether the foreign oil companies intended to leave Manchuria. Mr. Butler informed him that they would leave; I stated that I had no official knowledge of their plans, but that their departure seemed very probable.
Both the Japanese press and a Rengo article which appeared in the Tientsin English Newspapers have reported the probable departure of the foreign companies, so that Mr. Yoshizawa’s inquiry was ostensibly entirely natural. There are other indications, however, that the Hsinking authorities are surprised, and perhaps perturbed, at these reports of withdrawal. Mr. Clarke, formerly British Vice Consul at Mukden, returned Sunday from a trip to Hsinking, and reported that during a conversation with Mr. Ohashi, Vice Minister of Foreign Affairs for “Manchukuo”, Mr. Ohashi intimated that if the foreign firms remained monopoly legislation would be loosely interpreted and enforced in order to allow them to continue in business. Mr. Clarke also had an interview with General Minami, during which General Minami stated that if the foreign firms had sent their directors to Hsinking when the monopoly question was first being discussed, he believed that a mutually satisfactory agreement could have been reached at that time.
[Page 909]Mr. Jones, Assistant Manager of the Standard-Vacuum Oil Company returned today from a trip to Tokyo where he discussed the monopoly question with his directors and with the American Embassy. The Mukden branch has been instructed to submit to the “Manchukuo” authorities before May 10 a list of their properties in “Manchukuo”, with valuations, for purchase by the authorities in accordance with the “Law for the Purchase of the Equipment of Existing Businesses”. This list is to contain a statement reserving the company’s rights to additional claims at a later date for good will, cost of exporting stocks, and all other losses caused by the institution of the monopoly. All three companies have been instructed to postpone their application for withdrawal of stocks (see my despatch No. 85 of April 24, 1935) until further instructions; Mr. Jones believes, however, that this postponement is designed merely to facilitate the collection of accounts from Chinese agents, and that such application will be made by all companies as soon as outstanding accounts are settled. Mr. Jones received the impression that all three foreign companies are preparing to withdraw entirely from Manchuria and to refuse to cooperate with the monopoly in any way, and that no compromise short of an abandonment of the monopoly will cause the companies to reconsider withdrawal.
The Mukden oil representatives and I are agreed that it is desirable for the companies to submit their applications for withdrawal of stocks and sale of property as soon as possible, in order to bring their policy of withdrawal forcibly to the attention of the authorities, and impress upon them the necessity for quick action if they desire the foreign companies to remain. The Mukden oil representatives are recommending to their head offices that these applications be submitted at an early date. The Standard-Vacuum Oil Company reports that bus services in Jehol have been curtailed because of a gasoline shortage, and it is believed that gasoline shortages will occur at other points soon as the foreign companies’ local stocks become exhausted and the burden of supply falls more and more upon the monopoly.
Respectfully yours,
- Copy transmitted to the Department by the Consul General in his unnumbered despatch of April 30; received May 28.↩