893.6359 Antimony/20
The Secretary of State to the Minister in China (Johnson)
Sir: The Department refers to the Legation’s despatches Nos. 3626 of June 15 and 3637 of June 20, 1935, in regard to the proposed tungsten monopoly in Kiangsi, and No. 3619 of June 15, 1935, in regard to the Hunan Antimony Syndicate and monopolies in general.
By reference to the first two of the above-mentioned despatches, the Department notes the statement made by the Kiangsi Provincial Government that control over the export of Kiangsi-mined tungsten ore is centered in the Wolfram Mining Bureau; that such control apparently is not effective, as increased amounts of Kiangsi tungsten ore are exported through Changsha, Hunan; that in consequence of such deflection of supplies there exists at Changsha a competitive market for tungsten ore; that the Nanking office of the Legation is endeavoring to obtain from the Central Government a statement in regard to the proposed monopoly; and that the Legation, before officially discussing the matter with the appropriate Chinese authorities, proposes to await a possible clarification of the situation and the receipt from the Central Government of a definite expression of policy in regard to the monopoly under discussion. The Legation’s intention to acquaint itself thoroughly with the facts of this situation, before giving consideration to the advisability of making an official approach to the Central Government, has the approval of the Department.
With reference to the Legation’s despatch No. 3619 of June 15, 1935, which relates to the Hunan Antimony Syndicate in particular and to monopolies in general, the Department desires to commend the Legation for its careful analysis of the situation under discussion and to offer certain observations and suggestions which may be of assistance to the Legation in its further consideration of this subject.
[Page 787]By way of background, it may be stated that in the opinion of the Department, and notwithstanding assertions by the Chinese Government to the contrary, the creation of Chinese private and government trade monopolies, as well as foreign trade monopolies, would, in whole or in part, contravene the provisions of Article 15 of the Chinese-American Treaty of 1844, Article 14 of the Chinese-French Treaty of 1858 and Article 3 of the Nine Power Treaty of 1922. Thus the Department is in complete agreement with the Legation’s able and comprehensive presentation to the Chinese Government of this phase of the situation as set forth in the Legation’s note of October 6, 1933, addressed to the Acting Minister for Foreign Affairs.84 However, bearing in mind not only the foregoing but also the Legation’s opinion to the effect that there is inherent in the existing economic situation in China a decided trend toward the creation of official or officially sanctioned monopolies; that a policy of definite opposition to the creation of all monopolies would have but slight chance for success against a strong Chinese government; and that, as indicated in the Legation’s telegram No. 56 of February 1, 7 p.m., it is unlikely that, with the possible exception of the British Government, the American Government would receive from other governments active support in opposing the creation of monopolies in China, the Department is inclined to agree with the Legation’s suggestion that there be adopted with reference to this subject an attitude of flexibility. The Department, although desiring that the Legation continue to keep it fully informed of all developments of importance, is therefore prepared to grant to the Legation considerable latitude in deciding which cases of monopolistic control should form the subject of prompt protest to the Chinese Government. The Legation will of course bear in mind the views of the American Government in regard to all monopolies and the fact that such views are well known to the Chinese Government.
The adoption of the procedure indicated above should enable the Legation to concentrate its efforts to obtain remedial action upon those cases of treaty violation in which American interests are, or are likely to be, seriously affected. It would not, however, effect any change in the Legation’s past practice of opposing actively monopoly agreements which accord to foreign interests an exclusive or preferential trade position nor prevent the Legation from opposing unreasonable restraints on international trade.
With particular reference to the antimony situation in Hunan, it is the Department’s understanding that the Syndicate is unable to maintain an exclusive market; that its control is limited; that it is in serious [Page 788] financial difficulties; and that it has not granted to any foreign firm, as was originally intended, monopoly rights for the sale or export of antimony. If the Department’s information in this regard is correct, the Legation may deem it advisable to await developments before again referring the matter officially to the Chinese Government. On the other hand, if, as is indicated in the voluntary report prepared by the Hankow Consulate General under date April 23, 1935, and entitled “Sales Financing Activity of the Hunan Antimony Syndicate”,85 it should be ascertained that the Syndicate has in fact agreed to sell only to the Ta Chung Bank of Shanghai, or to confine its sales to any other firm or individual, Chinese or foreign, it would seem advisable that the Legation not only lodge with the Chinese Government a further protest in regard to this violation of treaty rights but also that it endeavor to cause the British Embassy to take similar action on behalf of British interests.
The Department is confident that the Legation will continue to give careful study to the development in China of commercial monopolies; that, bearing in mind the factors outlined above, the Legation will, by the use of all appropriate and practicable means, continue in its endeavors to render the maximum of assistance to American interests which may suffer in consequence of the creation of trade monopolies; and that the Legation will continue to keep the Department fully informed of all developments of importance.
Very truly yours,
- Not printed; for pertinent portion of the note, see telegram No. 336, October 6, 1933, 3 p.m., to the Minister in China, Foreign Relations, 1933, vol. iii, p. 597.↩
- Not found in Department files.↩