Office of the Historian

793.94/12905: Telegram

The First Secretary of Embassy in China (Salisbury) to the Secretary of State

Peiping, April 25, 1938—noon.
[Received April 25—7 a.m.]

254. Embassy’s 232, April 14, noon.30

1.
The Japanese controlled press continues to give considerable space to plans for economic exploitation of North China. Concrete and significant steps are not apparent except (a) the taking over of [Page 156] certain industrial installations in the occupied areas, (b) the creating of organs intended for the carrying out of exploitations, and (c) the making of plans for creating still more such organs.
2.
A Japanese Embassy official concerned with economic development states that:
(a)
the purely Japanese North China Development Company, capitalized at yen 500,000,000 will be the chief organ of exploitation;
(b)
five or six Sino-Japanese companies of a smaller scale will be formed to develop industries which have an “unavoidably monopolistic character” such as railways, salt, iron, electric power, and certain Shansi coal;
(c)
half the capital of each of the Sino-Japanese companies will be supplied by the North China Development Company, the remainder to be supplied by interested Japanese and Chinese concerns;
(d)
a representative of the North China Development Company will participate in the direction of each of the Sino-Japanese companies;
(e)
the company controlling railways will receive part of its capital from the South Manchuria Railway Company and will be run by personnel formerly serving in that company;
(f)
the above-mentioned Company will form the skeleton of economic exploitation around which lesser industries will develop;
(g)
it will take a year for the skeleton organization to be put into working order; and
(h)
meanwhile little is being accomplished economically in a concrete way.
3.
He further stated that the Sino-Japanese Economic Council (reference Embassy’s 191, March 28, 4 p.m.) will begin to function after return in May of Hirao, Vice Chairman of the Council, from Japan to Peiping, will formulate the policies of the Provisional Government and will give advice to the North China Development Company and to all lesser companies as necessary. Presumably as an aid to the Economic Council in its duties a “Ministry of Industries” is shortly to be inaugurated by the Provisional Government. According to the press Renzo Sawada, recently Counselor of Embassy at Hsinking, will arrive shortly to assist the Economic Council.
3 [4?].
Matsuoka of the South Manchuria Railway Company is reported in the press as stating that some delay may occur in establishing the projected North China Communications Company as the primary problem is to prevent the organizing of the North China Development Company which is “to supervise all enterprises in North China” and that the South Manchuria Railway Company may be able to invest yen 500,000,000 in North China during the next 5 years.

Repeated to Ambassador at Hankow.

Salisbury
  1. Not printed.↩