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Oral Statement by the American Ambassador in Japan (Grew) to the Japanese Prime Minister and Minister for Foreign Affairs (Prince Konoye), October 3, 1938

I am calling on Your Excellency Prince Konoye as Minister for Foreign Affairs in order briefly to discuss a subject in which the President of the United States is directly interested.

Well knowing how busy is Your Excellency I do not wish to bother you with too many details and I shall therefore confine myself to discussing this subject on general lines and include such details as are necessary in the form of a note to be delivered later at the Foreign Office.

The subject to which I refer has to do with the relations between Japan and the United States with special consideration of the situation of American interests in China.

I have had many conferences on this general subject with former Ministers, especially Mr. Hirota and General Ugaki, who have repeatedly given me precise and definite assurances that American interests in China would be respected and that the principle of the Open Door and equal opportunity would be steadily maintained.

The American Government to its regret is constrained to observe that violation of American rights and interests, including violation of the principle of the Open Door, has nevertheless persisted.

In the light of the situation which I am now reviewing, the President of the United States asks that the Japanese Government implement its assurances already given with regard to the maintenance of the Open Door and to non-interference with American rights by taking prompt and effective measures to rectify the situation which I am about to explain.

On April 12, 1938 I asked the Foreign Minister for assurances that the Japanese Government would not countenance financial measures discriminating against American trade in North China; although the Foreign Minister stated that the Japanese Government would continue to support the principle of the Open Door, no specific reply has yet been made to my representations.

[Page 783]

The American Government now learns that the Japanese authorities have in effect established an exchange control at Tsingtao, exercising discretionary authority to prohibit exports unless export bills are sold to the Yokohama Specie Bank, the Bank refusing to purchase these export bills except at a rate far lower than the open market rate at Tientsin and Shanghai.

A somewhat similar situation prevails at Chefoo.

Reports continue to reach the American Government that a comprehensive system of exchange control will soon be established throughout North China.

The exacting, either directly or indirectly, by the Japanese authorities of control of exchange in North China would place those authorities in a position to thwart equality of opportunity or free competition between Japan and the United States in that area, in view of the fact that control of foreign exchange transactions gives control of trade and commercial enterprises.

In such a situation imports from and exports to the United States, as well as the choice of dealers in North China, would be entirely subjected to the dispensation of the Japanese authorities.

The American Government has already pointed out to the Japanese Government that alterations of the Chinese customs tariff by the régimes functioning in those portions of China occupied by the Japanese and for which the Japanese Government has formally assured its support are arbitrary and illegal assumptions of authority, the responsibility for which the Japanese Government cannot escape.

It is hardly necessary to state that there can be no Open Door in China solong as the ultimate authority to regulate, tax, or prohibit trade is exercised, directly or indirectly, by the authorities of one “foreign” power in furtherance of the interests of that power.

It would appear to be self-evident that a fundamental prerequisite of a condition of equality of opportunity or Open Door in China is the absence in the economic life of that country of preferences or monopolistic rights operating directly or indirectly in favor of any foreign country or its nationals.

On July 4 I spoke to the Foreign Minister of the desire of the American Government that there be avoided such restrictions and obstacles to American trade as might result from the setting up of special companies and monopolies in China. The Minister was so good as to state that the Open Door in China would be maintained and that the American Government might rest assured that the Japanese Government would fully respect the principle of equal opportunity.

American nationals and their interests have suffered serious losses in the Far East arising from causes directly attributable to the present [Page 784] conflict between Japan and China, and even under the most favorable conditions an early rehabilitation of American trade with China cannot be expected.

The American Government therefore finds it all the more difficult to reconcile itself to a situation in which American nationals must contend with continuing unwarranted interference with their rights at the hands of the Japanese authorities in China and with Japanese actions and policies which operate to deprive American trade of equality of opportunity in China.

In its treatment of Japanese nationals and their trade and enterprise the American Government has been guided not only by the letter and spirit of the Japanese-American Commercial Treaty of 1911,24 but by those fundamental principles of international law and order which have formed the basis of its policy in regard to all peoples and their interests; and Japanese commerce and enterprise have continued to enjoy in the United States equality of opportunity.

Your Excellency cannot fail to recognize the existence of a great and growing disparity between the treatment accorded American nationals and their trade and enterprise by Japanese authorities in China and Japan and the treatment accorded Japanese nationals and their trade and enterprise by the Government of the United States in areas within its jurisdiction.

In the light of the situation herein reviewed, the President asks that the Japanese Government implement certain assurances which it has already given. It is requested by the President that, with a view to the maintenance of the Open Door and to non-interference with American rights the Japanese Government take prompt and effective measures to cause:

(1)
the discontinuance of discriminatory exchange control and of other measures imposed in areas in China under Japanese control which operate either directly or indirectly to discriminate against American trade and enterprise;
(2)
the discontinuance of any monopoly or of any preference which would deprive American nationals of the right of undertaking any legitimate trade or industry in China or of any arrangement which might purport to establish in favor of Japanese interests any general superiority of rights with regard to commercial or economic development in any region of China; and
(3)
the discontinuance of interference by Japanese authorities in China with American property and other rights including such forms of interference as censorship of American mail and telegrams and restrictions upon residence and travel by Americans and upon American trade and shipping.

There are many other cases involving restrictions or violations of American rights in China which I do not have the time today to go [Page 785] into. However I desire specifically to mention such cases as obstructions which are being placed by the Japanese military authorities in the way of the travel of American citizens in the interior of China; of the censorship of and interference with American mail and telegrams at Shanghai; the establishment of the Central China Telecommunications for the avowed purpose of controlling communications in Central China; and the organization of a Japanese controlled steamship company to monopolize water transportation in the Shanghai area.

I earnestly appeal to Your Excellency to bring your important influence to bear towards the solution of these many problems in the interests of Japanese-American relations which must depend in large measure upon the faithful observance by Japan of the assurances frequently and categorically expressed.