793.94/14557
The Consul General at Shanghai (Gauss) to the Secretary of State
[Received January 3, 1939.]
Sir: I have the honor to refer to my despatch No. 1848 of December 1, 1938,60 entitled “The Central China Development Company”, and to enclose a copy of a Domei press report of November 28, 1937,60 announcing the arrival at Shanghai on that date of Mr. Kenji Kodama, President of the Central China Development Company, accompanied by the Vice President of the company, Mr. Kaname Hirasawa, and by Messrs. Saburo Sonoda and Kyoichi Aburaya, directors of the company. Mr. Kiyoshi Kanai, another director, joined the party at Shanghai. A statement prepared for the press which Mr. Kodama gave out upon his arrival at Shanghai is also enclosed.60
[Page 414]In this statement, Mr. Kodama did not repeat the phrase “we are not interested in monopolies”, which he is reported to have used in his press interview on November 9, 1938,* at Tokyo, Japan, upon his appointment as President of the Central China Development Company. In fact, he made therein no reference at all to the monopolistic character of the subordinate companies of the firm.
Mr. Kodama’s statement, “we do not mean to threaten in any way third Power rights and interests in China”, will probably not reassure Occidental businessmen interested in the Central China market. Local American businessmen consider that Japanese restrictions on their freedom of movement and on their trading activities in the Shanghai hinterland have already deprived them of many of their rights and interests.
Mr. Kodama also stated that the Central China Development Company “desires to be the guiding factor in the economic reconstruction work of Central China by financing and managing the fundamental enterprises for production and trade.” If this goal is achieved, the Central China Development Company will probably control most of the manufacturing and trade in the Yangtze Valley.
So far as this office knows, no non-Japanese individual or organization has yet indicated any desire to invest in the subsidiaries of the Central China Development Company. The possibility that these firms may function more to aid Japanese economic penetration into Central China than for profit, and lack of confidence in the future value of the Yen may act as deterrents to any such investments. Hence, it will not be surprising if Mr. Kodama’s hope for the investment of foreign capital in the subsidiaries of the Central China Development Company is not fulfilled.
Mr. Kodama is quoted as saying to reporters upon his arrival at Shanghai,† “I intend to look about so as to formulate an idea of the existing situation.” He and his party planned to proceed to Nanking on November 30, 1938, for a two day visit. No announcement of his return to Shanghai has come to the attention of this office and it is believed that his visit up the Yangtze River has been extended.
Mr. Kodama’s statement contains little that is new, and Occidentals in Shanghai, who fear the effects of this firm and its subsidiaries upon their businesses, find nothing encouraging therein.
Respectfully yours,