895.63 Or 4/18

The Ambassador in Japan ( Grew ) to the Secretary of State

No. 134

Sir: The Embassy has received the Department’s instruction No. 40 of July 25, 1932 in regard to the Oriental Consolidated Mining [Page 821] Company. The matter has been discussed with Mr. Lower, General Manager of the Company in Korea, and with officials of the Foreign Office.

The situation appears to be that the Japanese Government has placed an embargo on the export of gold, and has fixed a price in yen which varies more or less with the rate of exchange at which the Finance Ministry will purchase gold from persons in Japan. The Oriental Consolidated Mining Company has a concession from the King of Korea dated April 17, 1896 for exclusive mining rights in the District of Uhnsan, Korea, a copy of which is enclosed.16 Article 13 of the concession states that no taxes shall be levied upon these mines or their properties or products. Article 14 provides that materials necessarily imported for the use of the mines may be imported free of duty and that no export duty shall be charged upon their products.

The company’s contention is that the embargo is in effect a tax upon their products. It claims that the price at which gold is purchased does not represent the true market value and that the resultant loss amounts to an impost which is not warranted under the terms of the concession. The Japanese Government’s contention, as brought out in conversation, is that the gold embargo is a temporary measure necessary for the public welfare; that it is not a tax and that there is no interference with the Company or its mining operations in any way.

Members of the Embassy staff have consulted with officials of the Foreign Office, and there is enclosed a copy of a memorandum16 handed by Mr. Dickover17 to the Chief of the Commercial Bureau (Mr. Taketomi) setting forth the Company’s contention. After some discussion with Mr. Lower, it was ascertained that the Company desired to transfer some $350,000 to the United States. Accordingly Mr. Neville18 had a further discussion with the Chief of the Commercial Bureau, and suggested that the Company be allowed, irrespective of any legal question involved, to export gold to this amount. If this were done the Company could meet its obligations for dividends and purchases in the United States until next spring. This suggestion was made as it was considered possible that by next spring the situation with regard to gold might be different. A copy of Mr. Taketomi’s letter to Mr. Neville, as well as a copy of Mr. Neville’s acknowledgment are also enclosed.16

It will be seen from these letters that the Japanese Government, or at least the Finance Department, is so far unwilling to grant the Company any special consideration in this matter. I should not feel [Page 822] justified in making formal representations in this case without specific instructions. I shall, however, continue to follow the case and report any new developments.

Respectfully yours,

Joseph C. Grew
  1. Not printed.
  2. Not printed.
  3. Erie R. Dickover, First Secretary of the Embassy in Japan.
  4. Edwin L. Neville, Counselor of Embassy in Japan.
  5. Not printed.