REPRESENTATIONS BY THE UNITED STATES AGAINST THE ESTABLISHMENT OF MONOPOLIES IN CHINA 893.6583/24: Telegram The Secretary of State to the Ambassador in China (Johnson) 69 WASHINGTON, January 26, 1937-7 p. m. 18. Your telegram 30, January 15, 6 p. m., in regard to China Vegetable Oil Corporation. It is the Department's desire that the Embassy in its further study of this subject, as indicated in the concluding paragraph of your telegram under reference," give special consideration to reports indicating that the Vegetable Oil Corporation will in the future work in close conjunction with the Government Testing Bureau. In the opinion of the Department, the possibility that the Corporation might seek to exercise even a measure of control over the testing of foreign-owned oil should receive particular attention. HULL 893.6583/31 The Ambassador in China (Johnson) to the Secretary of State No. 1148 69 PEIPING, March 23, 1937. [Received April 19.] SIR: I have the honor to refer to the Embassy's despatch No. 1082 of March 3, 1937, and previous correspondence in regard to the vegetable oil monopoly, and to enclose for the information and records of the Department copies of the Embassy's note of March 10, 1937, to the Foreign Office on the subject. 69 The Embassy stated in the note above-mentioned that it was becoming increasingly clear that the real objective of the China Vegetable Oil Corporation was to achieve monopolistic control of an industry which heretofore had flourished and had served as a happy trade medium between the United States and China. The Embassy remarked that it was difficult to believe that the Chinese Government would promote or even formally sanction any Government or semi-Government organ the functioning of which would impair the freedom of action in an industry from which for so many years such great mutual benefit to the two countries had been derived. The Embassy referred to its previous note of September 4, 1936," and Continued from Foreign Relations, 1936, vol. IV, pp. 600-628. " Not printed. This paragraph indicated that the Embassy was giving consideration to a course of action designed ao safeguard American tung oil interests in China from the activities of the China Vegetable Oil Corporation. 11 See despatch No. 692, September 4, 1936, Foreign Relations, 1936, vol. Iv, p. 613. expressed the hope that it might have, as requested in that note, a clear and concise assurance, based not only upon such treaty rights as might be applicable but upon amity and traditional good will, that the China Vegetable Oil Corporation had not been and would not be vested with any prerogatives which would constitute a monopoly or which would lead to the application of restrictions upon the legitimate trade of American citizens in China now or hereafter engaged in the purchase, sale, storage, refining, financing, testing, or transportation of oil products. The Embassy stated that an assurance to this end would do much to remove the deplorable uncertainty that now existed. In its consideration of this matter, the Department is respectfully referred to the Ambassador's despatch to the Department No. 372, dated at Nanking March 9, 1937,72 entitled "Plans of Chinese Government for Economic Reconstruction and the Promotion of Commerce and Industry", which deals in part with the general question of Chinese government monopolies. Respectfully yours, 893.6583/35 For the Ambassador: FRANK P. LOCKHART Counselor of Embassy The Ambassador in China (Johnson) to the Secretary of State No. 1348 PEIPING, July 17, 1937. [Received August 9.] SIR: I have the honor to refer to the Embassy's despatch No. 1148 of March 23, 1937, with which there was transmitted a copy of the Embassy's note of March 10, 1937, to the Foreign Office 73 in regard to the vegetable oil monopoly, and to enclose for the Department's information and consideration a copy in translation of the Foreign Office's note 3 in reply thereto of May 29, 1937. 73 The Department will recall that in its note to the Foreign Office of March 10, 1937, the Embassy expressed the hope that it might have a clear and concise assurance, based not only upon such treaty rights as might be applicable but upon amity and traditional good will, that the China Vegetable Oil Corporation had not been and would not be vested with any prerogatives which would constitute a monopoly or which would lead to the application of restrictions upon the legitimate trade of American citizens in China now or hereafter engaged in the purchase, sale, storage, refining, financing, testing, or transportation of oil products. The Embassy added that an as 12 Ante, p. 573. "Note not printed. surance to this effect would do much to remove the deplorable uncertainty that now existed. The Foreign Office states in its reply of May 29, 1937, that: "... There is certainly nothing to be said to the effect that there has been violation of the essence of the treaties and of former international relationships. In summary, since the Chinese Government does not give the China Vegetable Oil Corporation any monopoly rights and at the same time does not limit the enterprises of foreign merchants, the while trade matters of price, method, and transportation are business liberties of the merchants and are not encompassed by the treaties, it is difficult to give such assurances (as you have requested) .. 99 This statement of the Foreign Office is somewhat ambiguous, not only in the English translation made by the Embassy but in the original Chinese text as well. The Foreign Office states that the Chinese Government does not grant any monopoly rights to the China Vegetable Oil Corporation and does not limit the enterprises of foreign merchants. The Foreign Office appears to point out, however, that matters of price, method and transportation are "business liberties" of the merchants, not encompassed by the treaties, and for this reason the Foreign Office apparently finds it difficult to give the clear and concise assurance requested by the Embassy. The Foreign Office note is not as satisfactory as might be hoped for, but I do not see what good purpose would be served by requesting an elucidation of the ambiguous statement in question. I consider that it would be sufficient for the Embassy to address a communication to the Foreign Office, stating that the Embassy is gratified to receive the assurance of the Foreign Office that the Chinese Government does not grant any monopoly rights to the China Vegetable Oil Corporation and does not limit the enterprises of foreign merchants. Before doing so, however, I will appreciate receiving the comments of the Department on the Foreign Office note and its instructions in regard to any further action which it considers the Embassy should take in the matter. There is also enclosed "5 for the Department's information and consideration a copy of despatch No. 458, dated June 19, 1937, from the Consul General at Hankow 76 to the Embassy, with which there is transmitted a copy of a memorandum dated June 17, 1937, prepared for Mr. R. C. Mackay " by Mr. A. E. Marker, a British subject and Hankow manager of the Arnhold Trading Company, Limited, a British concern. The memorandum, which deals with the history and aims of the China Vegetable Oil Corporation, is written from the Enclosures not printed. "Paul R. Josselyn. "Of the Division of Far Eastern Affairs. viewpoint of a private exporter who is faced with the possibility that his export business will be seriously curtailed by the operations of the corporation. It is understood that a copy of the memorandum was sent by Mr. Marker to Mr. Mackay before the latter's departure from China for the United States. The Embassy commends the memorandum and Mr. Josselyn's covering despatch to the careful consideration of the Department. The Department will note that in the last paragraph of Consul General Josselyn's despatch mentioned above he states that "if there is no truth in the report of negotiations between the China Vegetable Oil Corporation and the Import-Export Bank, I believe it might be well for the Embassy to authorize me to inform Mr. Marker to that effect in response to his inquiry". The Embassy informed Mr. Josselyn in its instruction of July 17 that it had received no reports of any negotiations between the Import-Export Bank and the China Vegetable Oil Corporation and that he might confidentially inform Mr. Marker to that effect. Respectfully yours, NELSON TRUSLER JOHNSON 893.6583/35: Telegram The Secretary of State to the Ambassador in China (Johnson) WASHINGTON, October 11, 1937-6 p. m. 317. Reference your despatch No. 1348, July 17, 1937, in regard to the vegetable oil monopoly. The Department feels that, in view of the present situation in China, no useful purpose would be served by replying to the Foreign Office's note at this time. HULL 893.6354/45: Telegram The Secretary of State to the Consul General at Canton (Linnell) WASHINGTON, December 4, 1937-3 p. m. Your November 29, 1 p. m.78 Following for Yunnanfu: "Your November 29, 12 p. m. The matter of possible American participation in the development of the Yunnan tin industry has been referred to the appropriate Government authorities who are of the opinion that American interests would not care to participate in this venture. One of the factors which have assisted the Department in reaching a decision not to encourage American participation is its traditional attitude in opposition to Government monopolíes." Canton repeat to Embassy at Hankow. " Not printed. HULL EFFORTS FOR CONSIDERATION OF AMERICAN CLAIMS OUTSTANDING AGAINST CHINA " 893.51 Russian Issue/53: Telegram The Ambassador in China (Johnson) to the Secretary of State NANKING, January 14, 1937-3 p. m. [Received January 14-2:40 p. m.] 20. My despatch November 6 from Peiping 81 concerning Russian issue reorganization loan bonds. In Foreign Office note dated December 30, the Ministry of Finance is quoted as stating in part that the time limit for the exchange of the yellow bonds expired in May, 1930 and that it is now impossible to take any action with regard to the bonds held by American citizens. The Ministry of Finance adds that there is no record in its archives of the reported arrangement with two other nationalities named. I request the Department's instructions whether the Embassy is to attempt to alter the ruling of the Ministry of Finance and if so to what extent reference may be made to the sources of information concerning the reported arrangements made in favor of other nationalities. Some degree of secrecy seems to have been imposed. By mail to Peiping. JOHNSON 893.51 Russian Issue/56: Telegram The Secretary of State to the Ambassador in China (Johnson) WASHINGTON, January 30, 1937-3 p. m. 18. Your telegram 20, January 14, 3 p. m., in regard to Russian issue of Reorganization Loan. Department has received from J. G. White and Company authorization for the unrestricted use of the material, including citation of the sources of such material, submitted to the Department by the company and in turn transmitted to the Embassy as enclosures to the Department's instruction No. 252 of September 5, 1936.82 Department desires that the Embassy, unless it perceives objection thereto, tactfully and informally inform the appropriate Chinese authorities to the effect that, whereas the archives of the Ministry of Finance may contain no record of settlements with bondholders of British and Japanese nationality, there would appear to exist ample proof that settlements were made with some agency of the Chinese 80 Continued from Foreign Relations, 1936, vol. Iv, pp. 574-600. Ibid., p. 599. 82 Ibid., p. 595; enclosures not attached to file copy of instruction. |