600.939/319: Telegram
The Secretary of State to the Chargé in Japan (Dooman)
160. Reference Peiping’s 243, May 29, noon.68 Please approach the Japanese Foreign Office and present a formal signed note reading substantially as follows:
“The Government of the United States has on a previous occasion pointed out clearly to the Japanese Government the American interest in the north China trade in furs and skins. That interest, as the Japanese Government is aware, is three-fold: (1) American firms are prominent in the business of purchasing and exporting furs and skins from north China; (2) American consumers take the bulk of Chinese exports of domestic animal furs and skins and are to an important extent dependent upon China as a source of supply; and (3) the curtailment of exports from north China to the United States or to other free currency areas necessarily reduces the foreign exchange available for the purchase of American products.
Notwithstanding the American interest involved and the repeated assurances of the Japanese Government that the Open Door or equality of opportunity in China would be maintained, the fur trade in north China has been subjected almost continuously by agencies and instruments of the Japanese Government to unwarranted interference since the occupation of the area by Japanese military forces. Shortly after the Japanese occupation there were reports that monopoly rights for the purchase of wool and furs in Inner Mongolia had been granted by the Japanese authorities in that area to certain Japanese merchants. [Page 417] There were also reports to the effect that the Japanese-controlled authorities in Inner Mongolia had prohibited the exportation of furs and skins except with permission from the local authorities. It is now reported that an organization known as the Meng-chiang Trading Company is allowed a virtual monopoly of trade in Inner Mongolia, including the trade in furs and skins; and that that organization is allowed to transport to Tientsin lots of furs and skins which it endeavors to sell for foreign currency. Regardless of what may be the facts in regard to the reported embargo and monopolies, fur exporters in Tientsin state that they have been able to obtain only small lots bought in Tientsin by Chinese dealers at irregular intervals.
On June 28, 1938, the Peiping régime imposed an embargo, effective immediately, upon domestic animal hides and skins. Tientsin exporters were at that time in possession for immediate exportation to American purchasers of raw skins and plates valued at between four and five hundred thousand dollars United States currency, covered by letters of credit, while additional unfilled contracts at that time were estimated at 2 million dollars. Following representations by the American Government on July 4,69 July 6,70 and July 16,71 the embargo was modified on July 29 so as to allow exportation of the types of furs and skins of principal interest to American exporters and consumers. Nevertheless, members of the Tientsin Fur Exporters Association estimate that the embargo caused them a cash loss of eighty thousand dollars United States currency.
In recent months there has been a recrudescence of unwarranted interference with American trade in furs and skins.
It is now reported that certain Japanese firms are combined in an endeavor to form a monopoly in the Province of Shantung as a means of forcing fur exporters to deliver to them their export letters of credit, thereby turning into Japanese hands the foreign currencies obtained from the sale of furs and skins abroad. Japanese military authorities are reported to have arbitrarily detained several lots of furs at various times in Tsinan. It is reported that in one instance a lot of 139 bales was released only after the payment of a commission of over ten thousand dollars. At the present time it is reported that 15 bales of furs belonging to 3 American firms are being unwarrantedly detained in Tientsin, reputedly at the instance of the military authorities in Shantung.
During the month of March it was reported to the American Government that the post offices in the interior of north China were refusing to accept parcel post packages of furs and skins and that parcels arriving at Tientsin were being returned to the senders. Following representations by the American Government on April 8, 1939, it was reported that the postal authorities in north China had received instructions permitting the use of parcel post facilities for the transmission and delivery of the types of furs of interest to American exporters and consumers. It is now reported, however, that the Tientsin Fur Exporters and Importers Association has been [Page 418] informed by the Director of Posts in Hopei by a letter of date May 22 that, in as much as the formalities required by the authorities are at variance with postal procedure, furs and skins may not be shipped by parcel post for the present. The letter is reported to explain that the Japanese military authorities in Shantung do not allow the transmission of furs and skins through that province unless a permit is obtained directly from the military authorities. Notwithstanding the assurances of the Japanese Government in its note verbale of June 2, 1939, that the Japanese authorities in north China are endeavoring to effect a settlement of problems relating to the fur and skin trade, there has been practically no relaxation of the restrictions of which the American Government complains.
It appears that the principal interference with the fur and skin trade in north China has been caused either directly or indirectly by the Japanese military authorities, and it has been indicated from time to time by representatives of the Japanese Government that the interference with the trade in furs and skins has been warranted by military necessity. In the opinion of the American Government the argument of military necessity cannot repeat nor be applied in regard to this matter. There appears to be no reason why the Japanese military authorities may not enter the market and purchase the furs and skins which they require in open competition. The American Government has been forced to the conclusion that in interfering with the exportation of furs and skins from north China the Japanese military authorities are endeavoring to stifle competition with the object of driving prices down, thus enabling Japanese authorities to purchase their requirements at lower prices than would otherwise be the case, and to obtain foreign exchange from direct exportation by their own agencies.
The American Government protests emphatically against this continued unwarranted interference by Japanese instruments and agencies with legitimate commerce of American citizens in China and requests that the Japanese Government cause this interference to cease.”
Repeated to Peiping, Chungking and Tientsin.
- Not printed.↩
- See memorandum by the Ambassador in Japan, July 4, 1938, Foreign Relations, Japan, 1931–1941, vol. i, p. 605.↩
- See telegram No. 444, July 6, 1938, 7 p.m., from the Ambassador in Japan, Foreign Relations, 1938, vol. iv, p. 24.↩
- See telegram No. 468, July 16, 1938, 3 p.m., from the Ambassador in Japan, ibid., p. 27.↩