893.6583/3: Telegram

The Ambassador in China (Johnson) to the Secretary of State

309. My 296, June 10, 1 p.m. The following telegram has been received from Peck at Nanking:

“June 13, 1 p.m. Your June 10, 11 a.m. The net result of interview this morning with the Minister of Industries regarding the ‘Chinese Vegetable Oil Company Limited’ is as follows:

Existing facilities for storing and refining tung oil may continue in use but new facilities for pressing wood oil by machinery may be erected only by the company in question and the government is now giving consideration to the question whether private firms may be allowed to erect additional storage tanks.
When the new system is in operation the Chinese Vegetable Oil Company, Limited, will offer all necessary financial facilities entailed in the sale, shipping and insuring of oil stored in its tanks even to the extent of effecting sales direct to foreign purchasers but owners of oil thus stored will be at full liberty to arrange all such matters with other parties. There will be no limitation on the freedom of American merchants to purchase oil from native producers.
The object of the Government in setting up the new system is to prevent the wood oil industry from falling into a slump as the silk industry has done and to produce a supply of wood oil for export dependable in quality and quantity at a low price not subject to fluctuations. Success of the project requires willing cooperation of Chinese and foreign merchants and the Government has continuously and frankly consulted them.
I opened the conversation with detailed statement of importance of the wood oil trade to American merchants and industries and the American Government’s objection to any limitation violating treaty rights. The Minister of Industries in explaining the desire of the Chinese Government to improve and regulate the wood oil business referred with evident satisfaction to the conversations reported in the Department’s instruction No. 181, May 18, to Peiping32 and said that the Chinese Government had been embarrassed by lack of authority which would enable it to comply with the request of the American Government.”

The Consul General at Hankow has obtained further evidence that the scheme actually contemplates the monopoly control of the wood oil business. This evidence is contained in letters addressed by the Chairman of the Preparatory Committee of the “China Vegetable [Page 609] Oil Corporation (Limited)” to the Hankow Wood Oil Exporters Association and the foreign owners of wood oil tank installation. These letters do not confirm the innocuous nature of the scheme as described by the Minister of Industry to Peck. The Embassy is therefore filing written protest against the formation of the vegetable oil monopoly along the lines followed in the protest against the tobacco leaf monopoly.33

To Shanghai and Hankow by mail.

  1. Not printed.
  2. Protest addressed to the Chinese Minister for Foreign Affairs, June 18, not printed.