893.5151 Manchuria/11: Telegram
The Counselor of Embassy in China (Lockhart) to the Secretary of State
[Received October 18—7 a.m.]
668. The following telegram has been received from the Consulate General at Mukden:
“October 15, 5 p.m. On October 8th without warning an immediately effective law was passed revising exchange control law and [Page 930] authorizing Government to forbid or restrict all transactions in foreign exchange and acquire all bullion, foreign exchange or currency and foreign securities held in Manchuria as well as property of residents of Manchuria held abroad. Under this law Economics Department on the same day issued orders confining purchases or sales of foreign exchange to strictly commercial requirements but requiring ministerial permission for each transaction; prohibiting consignment exports, sale of foreign exchange except to banks and accounts, trusts, loans and compensation in foreign currency or foreign currency bonds; requiring sale in Manchuria of maturing foreign currency bonds, dividends or coupons; requiring reports on all existing trust or insurance contracts in foreign currency and on foreign currency or foreign bonds held here; requiring permission for insurance contracts in foreign currency; et cetera. Amounts under 1000 yen generally excluded from scope of orders.
In the orders, Japanese yen is stated not to be foreign currency while Japan is stated not to be a foreign country. The effect of this legislation is thus to require ministerial license for every trade, trust or insurance transaction with, every remittance to or from, and every investment in any foreign country other than Japan. Foreign banks, exporters and importers thrown in utmost confusion by the complicated procedure attending every overseas transaction as well as into uncertainty over the Minister’s unlimited powers to disallow exchange for prohibited transactions and disapprove the absolute freedom of exchange transactions with instructions from the Minister of Control and restrictions on such transactions with other countries. This, in my opinion, is the gravest blow dealt thus far by Japan to our commercial interests in Manchuria. It is also the grossest discrimination in favor of her interests put into effect since the occupation of Manchuria and a violation of every obligation she is under and pledge she has given to maintain the Open Door.
The text of the legislation has been translated and is being sent by mail”.47
Sent to the Department, Nanking and Tokyo.
- Not printed.↩