693.002/60: Telegram
The Counselor of Embassy in China (Lockhart) to the Secretary of State
Peiping, March 8,
1939—4 p.m.
[Received March 8—2:20 p.m.]
[Received March 8—2:20 p.m.]
122. Reference Tientsin’s 26, March 7, transmitting message from American Chamber of Commerce, and Peiping’s 119, March 7, 4 p.m.12
- 1.
- Today’s Peiping Chronicle states that the Federal Reserve Bank has established a preferred list of imports which must be supplied with exchange before other imports. The preference will be given first to imports of military supplies, then to daily necessities, and then to assorted materials. Items constituting these categories are not specified.
- 2.
- It is obvious that the above preference list will give the bank great leeway in allotting import exchange to the detriment of American business and imports from the United States and to the benefit of those countries from which the Provisional Government desires to import.
- 3.
- Although Chefoo reports that the changes envisaged by the new regulations will remove the chief interference to trade between the United States and that consular district and although Tsingtao reports that relatively little anxiety is felt in consular district and that merchants will endeavor to strengthen the export-import link trade, the possibility appears to me to be stronger than ever that more stringent and more comprehensive restrictions including unfavorable interpretations of the regulations will be placed in effect. Accordingly I believe the outlook to be extremely discouraging.
- 4.
- In substance it would seem exchange and trade control will affect only certain third countries inasmuch as Japanese and Manchukuo currency are presumably to continue at par with the Federal Reserve Bank currency in which case the new restrictions would not operate as a bar to trade between North China and Japan and Manchukuo; there is a probability also that barter arrangements will be operative between trade and Germany and Italy as is the case in Manchukuo, leaving other countries and other parts of China to bear the brunt of supplying foreign exchange for Japanese and trade’s needs.
- 5.
- A French banker stated today that his bank had received instructions from its head office not to cooperate with the Federal Reserve Bank’s plans and he added that he had been reliably informed that British banks had received the same instruction. According to the same source, German interests have protested to Berlin against control measures in North China but have been told to “keep still”.
Repeated Chungking and Shanghai. Code text by mail to Tientsin, Chefoo, Tsingtao and Tokyo.
Lockhart
- Neither printed.↩