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

No. 763

Sir: I have the honor to refer to the Embassy’s despatch No. 744 of September 25, 1936, in regard to the leaf-tobacco monopoly, and to enclose for the information of the Department a copy of despatch No. 382 of September 15, 1936, from the Consulate General at Shanghai,60 reporting the grant in July 1936 by the Ministry of Industry to the Philippine Chinese Tobacco Company, Ltd., (a Chinese corporation) of exclusive rights to manufacture mentholated and anisated cigarettes.

It will be observed from the enclosures to the despatch that the Yee Tsoong Tobacco Company Ltd. (British) considers this move to be a result of the operation of the policy laid down in the Industrial Encouragement Act of 1934. It appears to have more immediate relationship to the National Government’s present program for the establishment of monopoly control in the tobacco industry, and it is with reference to this matter that the Embassy is requesting Counselor Peck at Nanking to invite the attention of the National Government authorities to the circumstances that the grant of monopoly rights to the aforementioned Chinese tobacco company appears to be a part of the general monopoly program which faces the opposition of the American Government. It is nevertheless appropriate to remark the fact that the Foreign Office in its note of February 25, 1935,61 transmitted the assurances of the Ministry of Industry that the Industrial Encouragement Act “is simply a necessary arrangement for domestic industry and will result in not the slightest detriment to the interests of foreign merchants. During successive years all commercial interests acquired by foreign merchants under treaties have without exception been respected and protected by the Government, and there is really no discrimination.” (Cf. Legation’s despatch No. 3422, March 7, 1935.62)

A copy of the above-mentioned instruction to Mr. Peck is enclosed.61

Respectfully yours,

Nelson Trusler Johnson
  1. Neither printed.
  2. Not printed.
  3. See Foreign Relations, 1934, vol. iii, p. 569, footnote 32.
  4. Not printed.