893.6363 Manchuria/213
The Consul General at Mukden (Ballantine) to the Minister in China (Johnson)6
Sir: I have the honor to refer to previous correspondence concerning the “Manchukuo” oil monopoly, and to inform the Legation that the Standard-Vacuum Oil Company, the Texas Company (China) Ltd., and the Asiatic Petroleum Company under instructions from their head offices, yesterday addressed letters to the Ministry of Finance requesting permission to export from “Manchukuo” all their stocks of kerosene, gasoline and fuel oil, including those on consignment with their agents; they also requested refund of import duty on the exportation of these stocks. Copies of these letters are enclosed;7 these letters were drafted at a meeting held yesterday at the British Consulate General at which the oil companies’ representatives and I were present.
A copy of a personal letter which I addressed today to Mr. Tani, Secretary of the Japanese Embassy in Hsinking, is also enclosed.8 Mr. Butler, my British colleague, wrote a similar personal letter to Mr. Ohashi, Vice Minister of Foreign Affairs. Both Mr. Tani and Mr. Ohashi have expressed their sympathy with the position of the oil companies, and Mr. Butler and I desired to keep open all avenues of mediation in the event that this latest action of the oil companies elicits from the “Manchukuo” authorities any concessions worthy of consideration. Mr. Butler and I read drafts of these letters to the oil companies’ representatives, who expressed their complete approval of our action. It was the opinion of the meeting that the authorities of the Ministry of Finance, being primarily responsible for the institution of the monopoly, would be less likely to be influenced by this action than officials in other departments, and that our letters to Mr. Ohashi and Mr. Tani might enable them to exert their influence in circles outside the Ministry of Finance toward an abandonment of the monopoly if condition seemed at all favorable for the exercise of such influence.
It is not unlikely that these applications for withdrawal of stocks will prompt the “Manchukuo” authorities (1) to offer to buy these stocks, and (2) to invite the oil companies’ representatives to discuss the question of withdrawal. The Mukden representatives have received no instructions on these points, and could act upon such invitations only after referring them to their head offices. They believe, [Page 915] however, that their directors would not accept an offer to sell to the monopoly, and that any representatives sent to Hsinking would be empowered only to listen to such proposals as the authorities might make, and not to enter into a general discussion.
All three companies are now engaged in preparing their list of properties, with valuations, and expect to be able to submit them to the authorities before May 10.
Respectfully yours,