The Consul General at Canton ( Jenkins ) to the Minister in China ( MacMurray )89

No. 352

Sir: I have the honor to refer to my despatch No. 333 of December 3, 1925,90 and previous correspondence concerning the Canton government’s [Page 1093] monopoly on petroleum products and to report that Mr. Cameron, the general manager in South China of the Standard Oil Company of New York, recently had a conference with Mr. T. V. Soong, Minister of Finance and head of the Canton government’s Oil Monopoly Bureau.

Mr. Cameron came to Canton from Hongkong at the express invitation of Mr. Soong. Mr. Soong made it quite plain that the Canton regime intended to continue its monopoly on petroleum products. He admitted that the price of oil was high and that the government was experiencing difficulty in obtaining an adequate supply. He asserted, however, that a very considerable revenue was coming in and that he expected to increase this as time went on.

Mr. Soong then intimated to Mr. Cameron that the Canton government would like to enter into some agreement with the Standard Oil Company by which the company would supply most, if not all, of the oil and gasoline consumed in this district, and might at the same time undertake the distribution of petroleum products under the local government’s supervision. Mr. Cameron explained that he had no authority to discuss a proposal of this sort but promised to refer Mr. Soong’s suggestions to the Standard Oil Company’s general offices in New York.

Subsequent to this interview Mr. Parker, assistant general manager in South China, and Mr. Clark, the company’s manager in Canton, had another conference with Mr. Soong in order to have a clearer idea of the local government’s proposal. Mr. Clark has told me confidentially that the local government’s offer will be submitted in detail to Mr. Cole, one of the company’s directors now inspecting in the Far East. Mr. Parker will go to Shanghai to meet Mr. Cole and confer with the company’s general manager for North China at the same time.

Mr. Clark said that he did not think the company would consider the Canton government’s proposal. He declared he was opposed to it and that both Mr. Cameron and the manager for North China were of the same opinion.

Mr. Clark said that although the company might be able to make a profitable arrangement with the local government, it should not be overlooked that the acceptance of such a plan as the Canton authorities now propose would be construed as a tacit approval of the monopoly, which would undoubtedly spread to other provinces in China. In addition the British and other American companies would be well within their rights in protesting vigorously against any such arrangement because it would effectively shut them out of a legitimate market.

[Page 1094]

In connection with the Canton government’s proposals it may be interesting to the Legation to know that the imports of Russian oil from Vladivostock have been as follows:

October 120,450 gals.
November 131,550
December 1 to 17th, 92,500

It is admitted that this Russian oil is not satisfactory because its quality is inferior to American and British oils. It is also interesting to note that the quantity of American oil imported by the Monopoly Bureau from the Pacific coast is now increasing rapidly, so that the indications are Russian oil will ultimately be forced out of the market. These importations are being made by independent companies, including general commission merchants, who have not hitherto dealt in kerosene. It is understood that at present the imports of oil are less than a fourth of what they should be under normal conditions.

I have [etc.]

Douglas Jenkins
  1. Copy transmitted to the Department by the consul general as an enclosure in his despatch No. 419, Dec. 21, 1925; received Jan. 16, 1926.
  2. Not printed.