893.6363 Manchuria/38
The Japanese Ministry for Foreign Affairs to the American Embassy in Japan
1. In an informal memorandum dated July 7, 1934, the American Embassy expresses the desire to ascertain whether or not a report received by the Embassy concerning the establishment of the Manchurian Oil Company and a plan of the Manchukuo authorities for the establishment of an oil sales monopoly, has a basis in fact, and at the same time setting forth the views of the American Embassy in regard to these matters.
2. The plans of the Manchukuo Government as regards the establishment of a Manchurian Oil Company and the oil policies of the Manchukuo authorities, are in no way the concern of the Japanese Government. Consequently the Japanese Government regrets that it is unable to make any explanation thereanent. However, since the American Embassy has expressed the desire for information, there is herebelow quoted in outline for the information of the American Embassy a report recently received by the Japanese Government.
The Manchurian Oil Company was established in Manchukuo, as a juridical person, in accordance with a Special Law promulgated on February 21, 1934. This law does not confer any monopolistic rights whatsoever on this company, nor does it or the company’s regulations make any restrictions based on nationality as regards ownership of shares of the Company.
In line with examples set by various governments in Europe, the Manchukuo Government seems to be at present contemplating the enactment of a law to control the oil industry, an essential industry. According to reports at hand, the intent of the above-mentioned law is to make the sale of oil a government monopoly. The manufacture of oil and the exportation and importation of oil will not be monopolized by the Government. Moreover, the new law does not contemplate granting monopolistic rights to the above-mentioned company as regards the manufacture, importation, exportation, etc. of oil.
The report further indicates that according to the plan of Manchukuo, it is not contemplated that all the oil to be sold by the Government shall be monopolized by the products of the Manchurian Oil Company.
3. It is a fact that the South Manchuria Railway has invested in the Manchurian Oil Company and that the latter company has established its factory in the Kwangtung Province. However it is not believed that these facts are liable to give rise to any question of contravention of existing treaties on the part of Japan.
[Page 133]4. The question of the interpretation of the Sino-American treaty of 1844 and of some special provisions of the Sino-French treaty of 1858 in which American participation is specified; the question of whether such provisions do or do not directly bind Manchukuo which has become independent from China; and the policies of Manchukuo as regards these matters, are questions that concern the American and Manchukuo Governments, and as such the Japanese Government must refrain from referring to herein.
5. In view of these circumstances, the Japanese Government regrets that it is unable to prevent Japanese capitalists from investing in this oil company which is a juridical person in Manchukuo, nor is it able to prevent the authorities of Manchukuo from establishing a measure of control over oil. However the Japanese Government believes that the Manchukuo Government intends to give all possible consideration to the interests of foreign merchants now in Manchukuo in connection with the purchase and sale of oil, and recommends that American interests concerned deal directly with the authorities of Manchukuo.