The Chargé in China (Gauss) to the Secretary of State

No. 3291

Sir: I have the honor to enclose a copy of the Canton Consul General’s despatch to the Legation, No. 5, January 8, 1935,46 reporting the difficulties being encountered by the representative of the Boeing Aircraft Company of Seattle in his efforts to effect delivery of military planes under a contract with the General Headquarters of the First Group Army Corps, Canton, because of the American Government regulations which do not permit the exportation of the planes in question except upon the request of the National Government communicated to the Department of State through the Chinese Legation at Washington, which request the authorities at Canton have been unable to obtain except under circumstances which are tantamount to a refusal by the National Government to issue the necessary instructions.

As the Consul General’s subsequent telegram to the Legation of January 15, 12 noon, a copy of which is enclosed,46 indicates that the representative of the American company has departed for Shanghai, having been unable to produce any definite evidence in support of his contention that American sellers are being placed in a disadvantageous position in comparison with those of other nationalities by reason of the American Government regulations in this matter, there would appear to be no further action required upon this particular case at the present time.

In this connection, however, I have the honor to invite the Department’s particular attention to the Legation’s despatch No. 2904, August 14, 1934,47 and to the Hongkong Consulate General’s despatch to the Department No. 1056, October 24, 1934.48 These despatches and previous despatches from the Consulate General at Hongkong to the Department, indicate that the Chinese Government has not been able to enforce its regulations uniformly in respect to all imports of arms and munitions of war, and that there is considerable evidence that American merchants are being placed in a disadvantageous position in comparison with those of other nationalities.

From the information contained in the Yunnanfu Consul’s despatch to the Department No. 199, July 21, 1934.49 together with that contained [Page 715] in the Legation’s despatch referred to above, the Department will note that the National Government exercises no actual control over importations of arms and munitions of war into the Province of Yunnan from French Indo-China, and that the French Government does not interfere with such shipments, at least not those of French origin.

From the despatch of the Consulate General at Hongkong referred to above, it appears that the authorities there take the position that under the Barcelona Convention of 1921, they are unable to prevent the forwarding to China from Hongkong of arms and munitions when such shipments enter Hongkong as cargo to be transshipped to an ultimate destination. It would seem that the status of the cargo as a transit shipment need not be shown as having been declared at the time of export to Hongkong; it may be shown at Hongkong at any time prior to the arrival of the shipment, the production of a sales contract showing an ultimate destination beyond Hongkong being accepted as giving the shipment transit status.

It appears to the Legation that the situation actually existing at Hongkong, as disclosed in the reports from the Consul General at that post, permits practically unrestricted shipment of arms and munitions (including airplanes) to Canton through Hongkong from European countries which do not restrict exportations to Hongkong or inquire as to any ultimate destination of shipments made to that port.

If there is any disadvantage to American manufacturers arising out of the Hongkong situation it results from the action of the American Government, acting in good faith, in inquiring as to the ultimate destination of shipments exported as consigned to Hongkong.

As to the uniform enforcement by the Chinese Government of its restrictions on the importation of arms and munitions, attention is directed to the report of the Consul General at Canton (Legation’s No. 3025 of October 11, 1934, to the Department50) to the effect that, according to the Chinese Maritime Customs and the Canton Air Force authorities, “Canton ‘huchaos’ are sufficient to secure entry of airplanes into Canton.”

In connection with the proposed sale of these Boeing fighting planes to the Canton air force, I have to report that in November last, the Counselor of the Legation at Nanking was approached by the Boeing representatives, directly and through the Consulate General at Hongkong, with the suggestion that, with a view to expediting action, he inquire as to the status of the application made to the Ministry of War by the Canton First Army Air Force for National Government permits (or authorization to the Chinese Minister at Washington) to facilitate the export of the planes from the United States to China.

[Page 716]

Mr. Peck referred the request to the Legation, which instructed him that it considered it inadvisable for him to take any action in the matter, it appearing that the appropriate persons to approach the Ministry of War were the purchasers of the planes, the Canton First Army Air Force. The relations between the Nanking government and the Canton faction at the time were such as to make it undesirable that the Legation interest itself in the matter. It appears from Consul General Spiker’s51 despatch No. 5 of January 8th, 1935, transmitted herewith,52 that the Nanking government finally replied that it would give the necessary instructions to the Chinese Legation at Washington provided the purchase were made through the Central Bank of China at Shanghai and the airplanes delivered to the order of that bank—a reply tantamount to a refusal to permit the planes to be delivered to the Cantonese forces.53

Respectfully yours,

C. E. Gauss
  1. Not printed.
  2. Not printed.
  3. Not printed; for enclosure to this despatch, see Foreign Relations, 1934, vol. iii, p. 511.
  4. Ibid., p. 513.
  5. Ibid., p. 506.
  6. Foreign Relations, 1934, vol. iii, p. 513.
  7. Clarence J. Spiker, Consul General at Canton.
  8. Not printed.
  9. The Minister in China informed the Department in his despatch No. 3754, August 19, that Mr. Leighton W. Rogers, Vice President of the American National Aeronautical Chamber of Commerce and member of the American Economic Mission, had obtained a National Government permit to cover the 10 Boeing fighter planes in question (893.113/1621).