Foreign Relations of the United States Diplomatic Papers, 1935, The Far East, Volume III

893.6363 Manchuria/166: Telegram

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

Tokyo, April 16, 1935—7 p.m.
[Received April 16—3:20 p.m.⁹³]

87. Department’s 62, April 12, 8 p.m., Manchurian oil monopoly.

1. As foreseen in paragraph 3 of our 77, April 10, 7 p.m., the British Ambassador made his representations and left his note with the Minister for Foreign Affairs on April 12. The Department’s 62, April 12, 8 p.m. was received and decoded evening April 13. At the first practicable opportunity thereafter I saw the Minister for Foreign Affairs this morning and read and handed to him the following note, dated April 15:

“I have the honor to acknowledge the receipt of aide-mémoire No. 29, dated April 10, 1935, in regard to the petroleum monopoly in Manchuria.

The contents of the aide-mémoire having been duly communicated to my Government, I have now been instructed by the Secretary of State of the United States to inform Your Excellency that the American Government is unable to accept as valid the contentions advanced in the aide-mémoire to which reference is made. The American Government greatly regrets that the Japanese Government has not seen its way clear to use the influence which it possesses through its close and peculiar relations with the present regime in Manchuria to uphold in practice the principle of the open door and the fulfillment of the treaty obligations which both the Japanese Government and the authorities in Manchuria have on numerous occasions declared that they would maintain.

I am also instructed to state that the American Government is constrained to express its considered view that upon the Japanese Government must rest the ultimate responsibility for injury to American interests resulting from the creation and operation of the petroleum monopoly in Manchuria.”

2. I then made oral representations along the following lines.⁹⁴

(a) The creation of the oil monopoly in Manchuria and the part played therein by Japanese nationals and interests will have a deplorable effect upon American public opinion.

(b) The American public will regard as a most inequitable proceeding the destruction through the operation of the monopoly of a publicly valid business patiently built up through hard work over many years by American interests and the throwing of this business in large part into the hands of Japanese through the invalidation of treaty commitments.

(c) Although the peculiar relations and undoubted influence of Japan with the Manchurian authorities have been fully demonstrated in other recent issues, the Japanese Government in this case disclaims responsibility. This inconsistency will adversely affect American opinion with regard to the good faith and sincerity of the Japanese contentions.

(d) If, as has been publicly stated, the principle of national defense is involved in the creation of the monopoly, Japan, which has assumed responsibility for the defense of Manchuria, cannot dissociate itself from the monopoly project. If the monopoly is purely a matter of economic policy, it should be considered obligatory for Japan to associate itself with other nations in the maintenance of equal commercial opportunity in Manchuria.

3. (a) The Minister for Foreign Affairs replied that the question should be approached in a practical rather than a theoretic or legalistic way and stated that the principal trouble was that the oil companies habitually referred every step to their home governments and that their home governments would not permit them to reach a practical solution with the Manchurian authorities. I promptly refuted this argument, stating that while the American Government naturally supports American interests, it does not dictate their policy and the companies are entirely free to act as they think best. While the oil companies have no doubt been obliged through circumstances to consider the legalistic aspects, nevertheless they have regarded the question primarily as a business proposition and they have already been in touch with the Manchurian authorities without favorable results. (Representatives of Standard-Vacuum and Rising Sun inform us that at no time have any of the representatives of the oil interests stated to the Manchurian or Japanese authorities that it was necessary for them to refer any question to their home governments. They believe that this assumption on the part of the Japanese arose from the fact that the authorities are probably aware that every step is reported to the embassies).

(b) The Minister then reread our note and asked what I meant by the “declarations” mentioned at the end of paragraph 2. I immediately read to him several of the various assurances given by the Japanese Government concerning the maintenance of the open door in Manchuria, giving him specific references and dates.

(c) The Minister then said that the assurances regarding the open door had been given on the understanding that Manchukuo would be recognized by the other nations. He alluded to the fact that the United States had not even recognized the existence of Manchukuo and he observed that the Soviet Union had accorded de facto recognition by concluding a treaty with Manchukuo effecting the sale of the North Manchurian Railway. I asked if I was to understand from what he had said that treaty obligations and the principle of the open door in Manchuria are not to be held to apply to the United States. He replied that until the existence of Manchukuo is recognized “no dispute whatever can be entertained with regard to that country”.

(d) In conclusion I observed that the American Government based its case on treaty commitments and past assurances and then took my leave. (End of résumé of conversation).

To Peiping by mail.

Grew

93. Telegram in two sections.
94. Cf. Foreign Relations, Japan, 1931–1941, vol. i, pp. 149–151.