693.94244/130: Telegram
The Ambassador in Japan (Grew) to the Secretary of State
[Received August 17—7:36 a.m.]
169. Department’s 100, July 29, 5 p.m., smuggling situation in North China. This subject was broached today in the course of a conversation with the Vice Minister for Foreign Affairs. The interest of the American Government in the situation was reaffirmed and questions were asked concerning the results of the investigation conducted by Kuwashima, the chief of the Eastern Asia Bureau of the Foreign Office. The Vice Minister said that nothing startling had resulted from Kuwashima’s investigations but that he had found that the smuggling had decreased to only one-sixth or one-seventh of its former proportions partly because of saturation of the North China markets and partly because of the more efficient preventive measures taken by the Chinese authorities especially in regard to transshipment on the railways. The Vice Minister stated that the [Page 269] Japanese Government considers that the fundamental solution of the situation lies in the lowering of the Chinese tariff rates and that he understood that Dr. Kung was now considering this solution. He did not indicate that the Japanese Government would take any steps to deal with the situation which he said was rapidly being alleviated through natural processes.
Repeated to Peiping.