894.6363/210: Telegram
The Secretary of State to the Chargé in Japan (Neville)
160. Your 187, September 28, noon, last paragraph. In the event that the Japanese Government should indicate that it is not prepared to compensate adequately the Standard Oil Company for such costs as it may incur in maintaining stocks in excess of the 3 months’ supply which it is understood the company is prepared to carry at its own expense, and provided the company is penalized in any way, including that indicated in paragraph (c) of your telegram under reference, for failure to comply with the announced stockholding requirements, Department is inclined to believe that, if the company should desire further representations on its behalf, the Embassy could with propriety make known to the Japanese Government the opinion of the American Government that requirement by the Japanese—for purposes, as now stated by Japanese authorities, of Japanese national defense—that American companies store and hold, at their own expense and without adequate compensation, quantities of oil and properties accessory thereto not needed in their business, would in effect constitute a “military exaction” and as such be a violation of the terms of the final paragraph of Article 1 of the American-Japanese Treaty of 1911.
It is suggested that the Embassy gather and forward to Department, with statement of its views and recommendations, such additional evidence as may be available in support of the contention that [Page 928] the stockholding requirement of the oil law constitutes a military exaction and thereafter await the Department’s further instructions. Make no representations to Japanese Government on this point until further instructed by Department.