662.9331 Manchuria/2½
Memorandum by the Ambassador in China (Johnson)86
I had a long talk to-day with Dr. Kiep, head of the German Economic Mission, in the course of which he stated that his Mission had come out to the Far East for the purpose of reaching conclusions as [Page 59] to what opportunities there were for increasing Germany’s trade in the Far East. He stated that the visit of the Mission to Manchuria had no political significance whatever; that this was quite well understood by Mr. Hirota; but that later, when they arrived in Manchuria, Mr. Ohashi, Vice Minister of Foreign Affairs of the “Manchukuo” Government, had used their visit for political purposes, for it was from Ohashi and his group that emanated the publicity which hindered the possibility of a German-Japanese military alliance. He stated that he had complained to Hirota of Ohashi’s methods.
Dr. Kiep drew a comparison between the situation which developed between Germany and France when the German Army thought of France as a weak neighbor and therefore a threat to Germany, and the situation which now exists between Japan and China.
He spoke of German business in Manchuria, stating that formerly the South Manchuria Railway made some thirty-three per cent of its foreign purchases from the United States, thirty-three per cent from Japan, and spent the remaining thirty-three per cent in Europe and Germany. He said that now this had all changed, as the South Manchuria Railway purchased more than eighty per cent of its requirements from Japan; that recent developments in Manchuria were crowding German as well as other Western business representation in Manchuria; that German representation to-day was only forty per cent of its former strength and that it was still growing weaker. The reason was Japanese political control in Manchuria, aided by the great number of Japanese retailers all over the country. He mentioned also the great number of Japanese advisers employed in the various departments of the Government of “Manchukuo”, who were in a position to make it possible for bids to go to Japanese suppliers of goods.
Dr. Kiep stated that Germany was in dire need of Manchurian soy beans which they imported and used as a fertilizer for the farmers’ fields of Germany. He ascribed the recent butter shortage in Germany to their inability to purchase the soy bean of Manchuria. Germany was prepared to buy where it could sell. Manchuria was buying more and more from Japan and therefore selling less and less to Germany. He stated that his chief interest in Manchuria was to work out some sort of an arrangement whereby Germany could take soy beans in exchange for German goods. He said that difficulties were in the way, however, as the Yokohama Specie Bank wanted to have a monopoly of the business and to receive guarantees from the German Government covering all credits. He said that he did not know what attitude the Reich Bank would take in regard to this matter.
Dr. Kiep explained in some detail Germany’s need and the difficulties which she was now having. He mentioned the fact of the boycott which was current throughout the world and especially effective in the United States. It was his hope that the peoples of the world would [Page 60] forget the Jew in Germany and cease to agitate the matter, as such agitation by outsiders only tended to make the situation worse in Germany itself. He ascribed the recent recrudescence of anti-Jewish activities in Germany to politics, stating that the Party was losing a good deal of prestige because of the rapidly-increasing control over politics exercised by the newly-created German Army. The Party’s problem was to keep itself before the eyes of the people.
Reverting again to China, Dr. Kiep stated that Germany’s trade with China was too important to Germany for Germany to enter into any kind of an arrangement of a cooperative character with Japan. Germany was not interested in mixing up in the situation here in the Far East and thus sacrificing her hard-won share of world commerce.
- Copy transmitted to the Department by the Ambassador in China in his despatch No. 340, March 28; received April 20↩