Evening star., 1938-10-27

The Government OF the Unlted
States has had frequent occasion to
make Representations to your excel
lency's government in regard to action
taken and policies carried out In China
under Japanese authority, to which
the Government Of the United States
takes exception Is being, in its opinion,
in oontravention Of the principle and
the condition Of equality OF oppor-
tunity or the open door" in China. In
response to these representations, and
in other connections, both public and
private, the Japanese government has
given categorical assurances that
equality Of opportunity or the "open
door" In China will be maintained.
The Government Of the United States
is constrained to observe, however, that
Notwithstanding the assurances Of the
japanese government In this regard,
violations by Japanese agencies OF
American rights and interests have
persisted.
A. having, by way Of illustration.
bearing upon the situation to
which the Government Of the United
States desires to invite the attention Of
the japanese government, 1t is recalled
that 1T the time Of the Japanese occu-
patton Of Manchuria the japanese
government gave assurances that the
open door" in Manchuria would be
maintained. However, the principal
economic activities in that area have
been taken over by special companies.
which are controlled by japanese ma
tionals and which are established under
special charters according them . pre-
ferred or exclusive position. A large
part Of American enterprise which for
merly operated in Manchuria has been
forced to withdraw from that territory
as . result Of the preferences In force
there. Arrangements between Japan
and the regime now functioning in
Manchuria allow the free movement Of
goods and funds between Manchuria
and Japan while restricting rigidly the
movement Of goods and funds between
Manchuria and countries other than
Japan.
This channeling Of the movement Of
goods Is effected primarily by means Of
exchange control exercised under the
authority Of regulations Issued under
an enabling law which provide ex-
pressly that for the purposes Of the
law Japan shall not be considered q
foreign country nor the Japanese yen
. foreign currency. In the opinion Of
my Government equality Of oppor-
tunity, or the "open door," has vir-
tually ceased to exist In Manchira,
Notwithstanding the assurances of the
japanese government that 1t would be
maintained in that area.
The Government Of the United
States l. now apprehensive lest there
develop in other areas Of China which
have been occupied by Japanese mill
tary forces since the beginning Of the
present hostilities a situation similar
in Its adverse effect upon the COM
petitive position of American business
to that which now exists in Manchuria.
No Reply to April Note.
On April IL, 1898. I had occasion
to invite the attention of your ex-
cellency's predecessor to reports which
had reached the Government Of the
United States indicating that discrimi-
nation in favor of japanese trade
with North China was likely to be
effected by means of exchange con-
troll and to ask for assurances that
the Japanese government would not
support or countenance financial meas
ures discriminatory against American
interests. Although the minister for
foreign affairs stated then that the
japanese government would continue
to support the principle Of equal op-
portunity, or the open door in China,
no specific reply has yet been made
by the japanese government on the
subject Of these representations.
The Government of the United
States now learns that the japanese
authorities at Tsingtao have in effect
established an exchange control, that
.hey are exercising a discretionary
authority to prohibit exports unless
CAROAe HAAAo "a oOAA W WIG 4OAOt0ulh
Specie Bank, and that the bank re-
fuses to purchase export bills except
At an arbitrary rate far lower than
the open market rate prevailing at
Tientsin and Shanghai. A somewhat
similar situation apparently prevails
at Chefoo. Furthermore, reports con-
tinue to reach the American Govern
ment that a comprehensive system
Of exchange control will soon be es-
tablished throughout North China.
Control of foreign exchange transac-
tions gives control of trade and COM
mercial enterprise, and the exercise,
either directly or indirectly, by the
japanese authorities Of control Of ex-
change in North China would place
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