693.94244/116
The Chinese Embassy to the Department of State31
Despite repeated Diplomatic protests and censure of the world’s public opinion Japanese authorities in North China continue to extend protection to smuggling there on a large scale. The first twenty days of May witnessed further developments for the worse, both in respect of volume of illicit trade and variety of smuggled goods. For the three weeks ending May 17th smuggled goods arriving at Tientsin from the demilitarized zone comprised 448,920 kilograms of artificial silk yarn, 21,595,230 kilograms of white sugar, 49,324 kilograms of cigarette paper, 243,140 gallons of kerosene oil, 9,623 packages of piece goods and 13,110 cases of sundries. The duty lost on this illicit cargo is roughly estimated at six million dollars or on an average of two million dollars a week, which tallies without previous estimate that the loss of revenue would amount to one hundred million dollars a year or approximately one third of the total gross customs revenue. Under the protection of the Japanese Military authorities the smugglers no longer confine their attention to high duty-paying goods, but at the low costs invade almost every line of legitimate business. The expanding list of contraband goods brought in through the demilitarized zone now include sugar, artificial silk yarn, cigarette paper, kerosene oil, lubricating oil, piece goods, dyes of all descriptions, wire netting, bicycle parts, sea products, apples, medicine, cheese, tooth paste, rubber tires, canned goods, wines, isinglass, fruit juice, cosmetics, waterproof coats, aerated waters, candies, tin plates, nails, soft wood planks, alcohol, needles, beans, tins, milk, cotton and silk braids, saccharine, rubber shoes, electric batteries and shellac. Of chief note are increasing quantities of kerosene oil, which if smuggling is unchecked will soon disappear altogether from the customs returns. Furthermore there have been two consignments of arms and ammunition. It is feared that advantage is also being taken of the situation by drug traffickers. Authoritative observers on the spot point out the significant fact that apart from few comparatively small [Page 212] lots all illicit cargo arriving at Tientsin is of Japanese manufacture or origin.32
- Handed to the Under Secretary of State by the Chinese Ambassador on June 18; Dr. Sze “asked whether we had taken any steps recently vis-à-vis the Japanese Government and I told him that we had not done so”, Mr. Phillips noted at the time.↩
- In a memorandum of June 20, the Under Secretary of State approved a suggestion that “Mr. Hornbeck orally and in confidence inform the Chinese Ambassador that the American Government has approached the Japanese Government on several occasions in regard to smuggling and that this Government continues to follow with care the situation under reference”. (693.94244/117)↩