File No. 763.72112/10051

The Secretary of State to the Consul at Shanghai ( Johnson)

[Telegram]

[From the War Trade Board]:

Referring your September 10, 10 a.m. Where branch United States firm or person resident in the United States desires to deal with person falling within definition of “enemy” in Trading with Enemy Act formal license necessary from Bureau of Enemy Trade, Washington. Where merely American citizen residing in China dealing with enemy person no formal license necessary, and where branch United States firm or person resident in the United States [Page 445]dealing with merely German citizens no formal license necessary. In last two cases proper you advise as to desirability of action. In cases where United States firm or person resident in the United States trading with person falling within definition of “enemy” under Trading with the Enemy Act you should instruct them to make application through United States connections for formal license. Recommendations from you in such cases desirable. Reference cases where no formal license required as set forth above and where it is proper you should advise American citizen or American firm. In such cases follow general rule that where benefit to American large in proportion to benefit to enemy, transaction need not be disapproved. Deemed advisable for a time that you cable for advice in all but clear cases so that precedents may be established which you can follow in future cases. Reference particular question in your cable September 10, assuming case one where no formal license required as explained above, you should advise against transaction unless situation such that American will suffer very greatly if purchase not permitted or advantage to American interests through the purchase will be extraordinary. If American is branch of United States firm or person resident in United States [and] German is an enemy within definition of Trading with Enemy Act you should advise that they apply to Washington for an enemy trade license. You should in addition wire your recommendation. Reference second question, may Chinese beneficial owner transfer deed registered German Consulate to American, if case is one where no formal license required, as explained above, it would seem proper that you interpose no objection to transaction inasmuch as from meagre facts in your cable apparently essentially interested parties are Chinese and American. German connection purely formal. Hereafter in cabling for advice please give full details. Your cable of September 10, [10] a.m., unsatisfactory this regard.

Lansing