The American Ambassador in Japan (Grew) to the Japanese Minister for Foreign Affairs (Matsuoka)

No. 1665

Excellency: I have the honor to inform Your Excellency that my Government has taken note that the Japanese military authorities in North China have since October 1 applied certain so-called “regulations governing the control of inspections and shipments of raw materials for light industries in North China.” According to the press the regulations are applicable to cotton, hemp, jute, and other vegetable fibers, animal hair, leather, and furs. The regulations as published in the press specify that any movement, either locally or for exportation, of these materials shall be subject to permits signed by the Shimizu Unit of the Japanese Army; the Shimizu Unit is privileged to purchase at prices which it shall prescribe any of the aforementioned materials found upon inspection to be “suitable for military use”; the materials in question must, except in special circumstances, enter Tientsin only through the East Station; and the Shimizu Unit may demand the right to inspect any of the aforementioned materials which may be stored at any place in North China, irrespective of the nationality of the owner. According to an officer of the Japanese [Page 890]Consulate General at Tientsin, the regulations apply to stocks now in exporters’ warehouses awaiting shipment, goods bought in interior markets which have not yet reached Tientsin, and goods on which exporters have made commitments to overseas buyers, whether or not bought prior to October 1. The American firms which have thus far been principally damaged by the regulations which are being enforced by the Japanese military authorities are American firms engaged in the fur export trade. To these firms the new regulations have meant a virtual embargo on all fur exports from North China. The local military authorities have refused to inspect merchandise ready for export to the United States and attempts to obtain clarification of the new regulations have met with no success. The American Consul at Tsinan has reported that the local Japanese military authorities are offering for “rejected” skins prices far below the market value. Other information reaching the Government of the United States indicates that “inspection” will be refused at Tsinan unless merchants accept the arbitrary low price offered by the Japanese military authorities for skins already “rejected.”

The American Consulate General in Tientsin made representations on October 2 and on October 5 to the Japanese Consulate General there against the refusal of the Shimizu Unit to permit the exportation of certain furs packed for shipment before October 1 but the reply which the Consulate General received was evasive and unsatisfactory.

American firms both in China and the United States are greatly exercised in regard to the afore-described actions of the Japanese military authorities in North China. They are especially concerned in regard to their inability to obtain any modification of the new restrictions, imposed suddenly and without notice, which would permit them to export goods on hand and goods for which exporters have outstanding commitments. Failing an early modification of the attitude of the military authorities in China, American firms, both in the United States and in North China, are destined (1) to suffer large financial losses on account of stocks held for exportation under already existing contracts and on account of large additional unfilled contracts, and (2) to be eliminated from trade in which they have participated for a long period.

My Government registers a protest against this addition to the long list of violations of American rights and interests in China. It is especially urged that consideration be given to the immediate exemption from the new regulations of furs and skins now covered by purchase contracts.

I avail myself [etc.]

Joseph C. Grew