893.50/189
The Ambassador in China (Johnson) to the Secretary of State
[Received February 5.]
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Summary
In carrying out their plans for attaining political and economic control of North China, the Japanese authorities are making use of a large number of state policy organizations which exercise a complete monopoly over every important branch of economic activity, including transportation, communications, industry, agriculture, and banking. Most of these organizations are joint-stock companies created by charter of the “Provisional Government”. Their capital investments range from a few million to several hundred million dollars. They are supposed to be Sino-Japanese investments, but the Chinese portion is much smaller than the Japanese and, in most cases, represents Chinese properties seized by the Japanese. Although a Chinese has been put at the head of some of the larger organizations, all effective control is in Japanese hands. The immediate objectives of these organizations are (1) to provide transportation and supplies for the Japanese Army of occupation, (2) to produce, commandeer, or buy at low prices raw materials needed by Japan’s home industries, and (3) to make of North China an exclusive preserve for Japanese business enterprises and a protected outlet for surplus Japanese products. The methods employed are the counterpart of those adopted in Manchuria. They are fundamentally opposed to the “Open Door” policy and, unless effectively challenged, will undoubtedly lead to the exclusion from this area of virtually all legitimate American trade.
Respectfully yours,