The American Ambassador in Japan (Grew) to the Japanese Minister for Foreign Affairs (Arita)
Excellency: The renewed attention of Your Excellency is invited to my note No. 1178, dated February 6, 193945 relating to the imposition by the Japanese naval authorities at Chefoo of various restrictions on the shipment of merchandise, to the informal memorandum relating to unwarranted restrictions placed upon American personal and business interests in Tientsin which was left by the Counselor of the Embassy on [with] the Director of the American Bureau of the Foreign Office on February 6, 1939,45 and to the aide mémoire which was left at the Foreign Office on March 8, 1939,46 in which the hope was expressed that, in view of the continued imposition [Page 832]of such restrictions at Tientsin, necessary steps would immediately be taken to alleviate those restrictions.
From various sources the Government of the United States has received further information to the effect that the Japanese sponsored régime in North China, with the support of the Japanese authorities, has brought about the imposition of drastic trade restrictions, including the requirement of export permits and controlled money exchange.
The Government of the United States regards these export restrictions as the most comprehensive discrimination against the United States and other foreign countries and in favor of Japan which has yet been established in North China by Japanese authorities and as a virtual nullification in that area of the principle of equal opportunity so far as import and export are concerned. The proposed measures will automatically increase the price of exports and probably have the effect of reducing markedly exports to foreign countries other than Japan and pari passu of reducing imports from those countries while leaving trade between that area and Japan virtually unrestricted. During the past year the exchange value of the currencies in circulation in North China has been considerably depreciated and prices in that area have become more or less adjusted to this depreciated value; if exports are quoted suddenly in terms of a new currency whose value is maintained by exchange controlled at an artificially high level in terms of foreign currencies, North China foreign trade will tend to suffer and imports to decline along with exports. Meanwhile, it is clear that Japanese trade will not only not be damaged by the proposed restrictions but will be benefited by the new measures to the prejudice of other foreign interests. These considerations give added force to the objection which the American Government has repeatedly advanced to the institution of trade or exchange control by Japanese authorities in North China, the basis of such objection being that all trade with North China would thereby become subject to Japanese discretion and that equality of opportunity would no longer be possible.
The Government of the United States, in fact, regards with deep concern the increasing evidence in Japanese-occupied areas in China of interference with the normal flow of trade between the United States and those areas, and expresses the hope that the Japanese authorities will not countenance these measures but, on the contrary, will remove existing restrictions which tend to prevent between the United States and North China the same normal and uninterrupted flow of trade that now, so far as action by the United States Government is concerned, prevails between the United States and Japan.
I avail myself [etc.]