693.94244/31: Telegram
The Secretary of State to the Ambassador in Japan (Grew)
66. Your 114, May 27, 6 p.m. The Department has received a letter from the Standard-Vacuum Oil Company, New York,9 stating that the smuggling of kerosene and gasoline into North China is seriously affecting its business and threatens the existence of its trade in that part of China extending from the borders of “Manchukuo” to the Yellow River. The letter further states in substance that smuggled oil brought into North China through the east Hopei autonomous area is assessed by the regime in that area a duty of approximately 11 cents Chinese per gallon, or about one-fourth the amount of the Chinese import duty; that arrivals of Japanese smuggled oil into Chinwangtao and vicinity between April 15 and 30 were 15,600 cases and between May 1 and 20 were 40,000 cases; that the company’s sales have ceased in the Chinwangtao area and in Tientsin and have been seriously affected in adjacent territory; and that these smuggled oils are being sold at some Yuan 1.70 per case of 10 gallons below the company’s official prices.
The Department suggests that the Embassy unless it perceive objection orally and informally approach the Foreign Office and in response to the inquiry of the Vice Minister mentioned in the telegram under reference bring to its attention the above information, as evidence, in regard to the effect of smuggling on American trade in kerosene and gasoline. It is also suggested that this occasion be taken to point out that the sale and distribution of other items of American trade are effected in a similar manner by the influx of smuggled goods and to reaffirm the concern of this Government in the situation which is seriously affecting American interests.
Repeat to Peiping as Department’s No. 131, June 1, noon, adding that the Department desires that Peiping currently furnish Tokyo with copies of despatches and telegrams in regard to smuggling in North China and specifically with a copy of Peiping’s despatch No. 322 of March 21.10