893.6363 Manchuria/162: Telegram
The Ambassador in Japan ( Grew ) to the Secretary of State
[Received April 7—5:45 a.m.]
75. 1. The Consul General, Mukden, and the Consul at Dairen report the issuance on April 4 of regulations effective April 10 for the control of the petroleum trade in the Kwantung Leased Territory and the South Manchuria Railway zone. The regulations do not refer to the monopoly and do not appear to preclude the continuance in business of the foreign oil companies within the territory covered by the regulations. The regulations, however, impose a licensing system upon importers, exporters, wholesalers and retailers of petroleum products and require special permission to import oils into or export oils from the territory. Provision is also made for monthly reports of stocks and for police inspection.
2. Mukden reports that the oil companies believe that the regulations are not for the purpose of excluding the foreign oil companies from business but are intended to prevent shipments to Manchukuo in contravention of the monopoly law.
3. The Embassy is of the opinion that the regulations were issued in order to afford as much assistance as possible to the enforcement of the monopoly without actually permitting the monopoly to operate within territory directly controlled by the Japanese Government. [Page 891] In this way the Japanese Government probably hopes to avoid charges of acquiescence in and of active assistance to the monopoly and to escape direct responsibility for losses incurred by the foreign oil companies because of the enforcement of the monopoly.
Repeated to Peiping by mail.