611.939/55: Telegram
The Counselor of Embassy in China (Lockhart) to the Secretary of State
[Received October 31—8:30 a.m.]
649. Department’s 369, October 28, 5 p.m., was repeated October 31, 4 p.m., to Tokyo with the addition of the following paragraphs.
“Tientsin Consulate states wool received at Tientsin far exceeds German and Japanese requirements for wool of that type and that the direct exports of such wool to Japan are too small to warrant the imposition of an export embargo; but the embargo gives official recognition to the restrictions placed on wool trade in primary markets (especially Mengchiang) by the Japanese military. Consulate General believes restrictions probably imposed at the instance of Japanese military in order to acquire foreign currency credits through eventual sale of wool to foreign markets on barter basis. It is reported that stocks of carpet wools totaling over 1,000,000 pounds have been stored in Kalgan for several months; but the Japanese have declined to purchase any considerable portion, have simultaneously prohibited non-Japanese buyers from making wool purchases in Kalgan and have denied transportation facilities for wool cargoes from that point to Tientsin when destined for non-Japanese consignees. The Consulate observes that removal of the export embargo would be of only slight benefit so long as exporters are denied free access to the primary wool [Page 80] markets in the interior and refused transportation facilities from those markets to Tientsin.
Chinese Maritime Customs returns show the United States to be in recent years by far the most important importers of Tientsin wool. Inasmuch as there is in North China a large amount of native wool used in the production locally of woolen yarn, cloth and blankets (as well as carpets), it is possible the Department in the first sentence of section 2 of its telegram intended not wool ‘produced in’ but ‘exported from’ this area.[”]
2. Paragraphs next above have been repeated to Department. Code text by mail to Tientsin.