Evening star., 1938-11-18
Text of Japanese Note
By the Associated Press.

WV W
By the Associated Press.
TOXIC, Nov. 18.-The text of the
Japanese note replying to the
United States protest on China,
handed today to Ambassador Jo-
seph C. Grew by Foreign Minister
Hachiro Arita, follows:
Excellency:
I have the honor to acknowledge
receipt of your excellencys note,
dated October 6. addressed to the
minister OF foreign affairs, Prince
Fumimaro Konoye. concerning the
rights and interests of the United
States in China.
In the note are cited various in
stances based on information in
possession of the Government of the
United States that japanese au-
thorities are subjecting American
citizens in China to discriminatory
treatment and are violating the in
terests of the United States.
I now have the honor to state
hereunder the opinions of the Japa-
IlCSC kONCI lCS lllCoS AA0
stances
Firstly, the circumstances which
led to adoption of the present meas
ures concerning export exchange in
Tsingtao and the present situation
being, SO far as the Japanese gov
ernment are aware. as set forth
below, they consider that these
h4 CT a. c
constituting any discrimination
against American citizens.
Federal Reserve Established.
A short time ago the Federal Re
serve Bank of China was established
in North China, whose notes with
an exchange value fixed at l shill-
ing and pence (about % cents)
against l yuan have been issued
thus far to an amount of more
than 100 1000 900 yuan and are wide
ly circulated. These bank notes be-
ing compulsory currency of the pro-
visional government, maintenance
of their value and smooth circu-
lation is regarded as an indispen-
sable basis for the conduct and
development of economic activities
in North China. Consequently the
japanese government have taken
cooperative attitude; and all Japa-
nese subjects are using said notes
and in their export trade exchang-
ing them at q rate of l shilling
and 2 pence.
On the other hand. the old fapi.
still circulating in these areas. has
deprecated in exchange value to
about 8 pence ZIG cents) to the
yuan. Consequently, those engaged
in export trade who use this cur
rency are enjoying illegitimate
profits as compared to those who
use Federal Reserve notes and carry
on legitimate transactions at the
legitimate rate of exchange: That
is to say, Japanese subjects who
use Federal Reserves notes have
been suffering unreasonable disad-
vantages compared to persons who,
while residing and carrying on their
business in areas under the jurisdic-
ton of the provisional government
of North China. nevertheless use
the old fapi exclusively.
Furthermore, the existence of the
before mentioned disparity in the
exchange value between the new
notes and the old fapi, which the
Federal Reserve Bank has been ex-
changing at the rate not far below,
Is bound to exert an unfavorable
effect upon the exchange value OF
the Japanese yen.
Cannot Remain Indifferent.
The Japanese government feel 1t
is incumbent on them not to remain
Indifferent to such a situation.
. Export exchange measures as
adopted at Tsingtao are calculated
to place users of the old Chinese
currency, who have been obtaining
unfair profits, on an equal footing
with those using Federal Reserve
notes.
Inasmuch as application of the
measures makes no differentiation
according to nationality, they can
not be considered discriminatory
measures. AS a matter of fact, it Is
through these measures that those
users Of Federal Reserve notes who
had in a sense been Disseminated
against have been placed on equal
footing with others and thus enabled
to compete on a fair basis.
Secondly, in North and Central
China new Chinese regimes some
time ago effected revisions of the
customs tariff in an attempt to Sc
cure rational modification of the
former tariff enforced by the Kuo-
mintang government, which was
unduly high and ill-calculated to
promote economic recovery and the
general welfare of the Chinese peo-
pie.
However, the schedule actually
approved for the time being Is the
one approved by the powers in 1881,
so that no complaint has been heard
from foreign residents of any ma
tiorfality on the spot. The Japanese
government Is, of course, in favor OF
the purpose of said revision, believ-
ing it will serve to promote elective
ly the trade of all countries with
China.
Development . Necessity.
Thirdly, as for organization OF
certain promotion companies in
China. restoration and development
of China's economic, financial and
industrial life after the present af-
fair is . matter of urgent necessity
for the welfare of the Chinese.
Moreover. the japanese govern
ment Is deeply solicitous for the