693.943/6: Telegram

The Ambassador in China ( Johnson ) to the Secretary of State

215. Department’s 70, April 1, noon, and paragraph 5 of Embassy’s 191, April 16, 3 p.m.

The smuggling of Japanese produce into North China through Yin Ju Keng’s area has reached such widespread proportions that it is now beginning to affect trade in various parts of China. The Consulate General at Tientsin has obtained from the customs a detailed statement showing the quantities of principal smuggled commodities from August, 1935, to April 18, 1936, and a summary of arrivals at Tientsin and departures therefrom during the week ending April 18, 1936. From April 12 to April 18, inclusive, there arrived from the North at the East Station, Tientsin, 8,044 bags of artificial silk yarn; 46,452 bags of white sugar; 49 bags of cigarette paper; 1,842 bags of piece goods; and 1,591 packages of sundries, all of these goods having been smuggled in through Yin Ju Keng’s area. During the same period smuggled goods despatched to other parts of China by the Peiping and Tsinpu Railways from the East, West and Central Stations at Tientsin amounted to 5, 198 bags of artificial silk yarn, 34,089 bags of white sugar, 312 bags of cigarette paper, and 20 packages of sundries. These goods were destined to Tsinanfu, Chowchun, Paotou, Tehchow, Hsuchow, Kaifeng, Shunteh and Yutze. From August 1, 1935, to April 18, 1936, the following smuggled goods arrived at the East Station at Tientsin: 82,689 bags of artificial silk; 5,969 bags of cigarette paper; 19,228 bags of piece goods; 398,525 bags of white sugar; and 6,799 bags of sundries. The exact time of delivery of these goods has been checked by the railway authorities and some of the produce delivered to motor trucks and mule carts and taken to places in the Japanese concession in Tientsin.
The smuggling operations are now being extended along the coast south of Tangku toward the Shantung border. Smugglers in that area are alleged to be bringing their goods from Dairen and by means of small rivers and roads to make delivery to the Tientsin-Pukow Railway at Tanghsien.
Another recent important development which if prolonged will seriously impair an important American trade, is that large quantities of smuggled kerosene and gasoline have now begun to arrive in Tientsin from East Hopei. It is known that shipments of as large as 1,000 cases of Japanese kerosene and as many as 990 cases of gasoline have recently arrived at Tientsin. Shipments of several hundred cases of either kerosene or gasoline are not uncommon. This situation is so menacing that the Standard Vacuum Company has [sent?] its North China manager to Shanghai for a conference.
The uncurbed activities of the smugglers are now leading to a complete disorganization of trade and to disastrous impairment of customs revenues in North China. At present there seems to be no prospect of early relief. On the contrary, there are suspicions that the present extraordinary situation may be the result of a studied effort to impair the financial and economic control in North China of the Central Government. General Matsumuro recently remarked to a press representative that from the point of view of China the movement is smuggling, but from the point of view of the East Hopei Autonomous Government the goods are “imports”. The fact that smugglers apparently pay a tax to Yin Ju Keng’s authorities which is less than rates levied by the regular customs establishment lends a certain amount of color to Matsumuro’s reported statement.
The smuggling problem is probably now the most serious single factor confronting the Central Government.

By mail to Shanghai and Tokyo.