662.9331 Manchuria/3: Telegram

The Second Secretary of Embassy in China (Atcheson) to the Secretary of State

118. I am informed by responsible officials of the Foreign Office that (1), the German Chargé on April 29, notified the Foreign Office orally that a “commercial arrangement” lacking any political significance would be concluded next day between Germany and Manchukuo; (2), such agreement was signed in the Manchukuo Embassy in Tokyo April 30 by Dr. Otto Kiep, head of the German Trade Commission in the Far East, but the identity and status of the official acting on behalf of Manchukuo is not yet known; (3), the German embassy has promised to furnish the text but this has not yet been received; (4), Dr. Ritter, head of the economic section of the German Foreign Office informed the Chinese Ambassador in Berlin that the agreement contemplated the purchase by Germany of Manchurian soyabeans on 75% credit and 25% cash, the credit to be used in the purchase by Manchukuo interests of German products.

Repeated to Department and Peiping; by mail to Tokyo, Berlin.
Although some such development is believed to have been envisaged by the Foreign Office as a probable result of the Kiep mission, the informants indicated that hopes to the contrary had been entertained, particularly because of the efforts put forth by Germany since the war to win Chinese good will and expand German trade in China. The Foreign Office is obviously concerned; it fears the agreement may set a precedent for other countries who have been showing interest in Manchurian trade (the informants named Great Britain, France and Belgium); it considers that the agreement constitutes factual recognition of Manchukuo by Germany. Thus if others follow Germany’s example in respect to commercial arrangements it is to be anticipated that diplomatic relations between Manchukuo and some Western Power may later ensue, eventually resulting in a general breakdown of the Western Powers’ present policy of nonrecognition of the Manchurian regime.
To the Department and Peiping, by mail. To Tokyo, Berlin.
  1. Telegram in two sections.