893.102 Tientsin/214: Telegram

The Counselor of Embassy in China (Lockhart) to the Secretary of State

741. Your 321, December 15, 7 p.m., and Peiping’s 727 December 17, 3 p.m., and 734, December 21, 2 p.m., and Tientsin’s 233, December 22, 10 a.m. [p.m.]49 Following from Tientsin:

“December 22, 4 p.m. Embassy’s December 17, 1 p.m. I am still unable to ascertain precisely what restrictions on the movements of Americans and American cargo are enforced by the Japanese military at the present time, although I have questioned Consul General Tashiro yesterday following his return from Japan, and in his absence Consul Tanaka, and have written to Consul General Tashiro asking for information as to the precise nature and purpose of these restrictions, his written reply having stated merely that the measures taken ‘have not been adopted to restrict the movements of American citizens but only to inspect those Chinese who pass these barriers in an effort to curb the activities of anti-Japanese and communistic elements. Orders have been given to hinder the movements of citizens and subjects of other countries as little as possible, but to our great regret it is inevitable that such citizens and subjects sometimes experience inconveniences and delay when passing points where inspection of Chinese is being carried on.’

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It is impossible to predict with any certainty what would be involved in ‘isolation’ of the American industries but it might be of interest in this connection to know that Consul General Tashiro voluntarily called on me yesterday to discuss the inconveniences being suffered by Americans, for which he expressed regret and which he is evidently disposed to remedy so far as lies within his power, and that the Japanese military complied with our request that the barrier at the race course road corner of the marine barracks be removed into the first Special Area beyond the barracks gate, leaving the barracks unobstructed entrances both from the British Concession and first Special Area.

The third section of this telegram has been drafted on the assumption that in case of ‘isolation’ of the American industries American nationals could pass the barriers both in and out, and that foodstuffs could come in; but that Chinese and commercial cargo could not pass in or out, that the customshouse would be moved outside the Concessions, and that there would be exchange control.

The nature and extent of American interests in the British and French Concessions at Tientsin are (1) an American investment estimated at more than $12,000,000 local currency including land, buildings, machinery and equipment, stocks of merchandise, unregistered loans and mortgages; (2) the business turnover of American firms in the concessions covers, roughly estimated $200,000,000 local currency, about half of which is business conducted by the two American banks; (3) trade with the United States handled by non-American firms (little of which is done by Japanese firms) conservatively estimated at $50,000,000 local currency in the current year.

The American interests in the British and French Concessions include: 2 banks, 2 petroleum companies, 2 dye houses, 4 motor dealers, 2 woolen mills, more than 20 fur exporters, and several general import-export firms, real estate companies and other enterprises. American citizens reside in these two Concessions.

All important American business firms in Tientsin, in reply to inquiries made by this Consulate General, have expressed the opinion that isolation of the Concessions by the Japanese would stop all American business at least temporarily or permanently as it would be very difficult if not impossible to conduct business activities outside the Concessions and certainly impossible to continue business activities from within the Concessions as the firms would be unable to maintain their contacts with Chinese customers and also would not be able either to receive or deliver cargo. The Consulate General concurs in these views.

The effect of the steps already taken by the Japanese is reported by Americans as being not extremely grave. Some difficulties are reported in connection with passing cargo out of or into the Concessions to or from Japanese-controlled areas resulting in delays and increased expense; a certain amount of difficulty and delay was reported in connection with Chinese office employees and laborers who live outside the Concession reaching American offices and shops in the Concession; and a diminution of all business is reported due to the prevailing uncertainty as to the immediate intentions of the Japanese military.

The above refers only to the British and French Concessions, but it should be borne in mind that the installations of the Standard and Texas Oil Companies and other American properties in the third [Page 110] Special Area for some time have continued to become increasingly inaccessible owing to restrictions on the movements of personnel and merchandise imposed by the Japanese gendarmerie presumably owing to the great amount of military stores in that area and the frequent fires in such stores, it being now impossible for persons residing at the installations to move in or out of the area at night, and difficult for the trucks of the companies to travel through the area even in daylight.

Sent to Peiping, repeated to Chungking.”

It is difficult to draw the dividing line between bona fide restrictions to curb aid to guerrillas and the imposition of restrictions designed to prevent normal trade activity. There are so many outward signs, however, studied plan intended gradually to stifle the business activities of third powers protected in China that there seems little likelihood that the Tientsin restrictions will be removed in the immediate future or even to any appreciable extent. Certainly this has not been done in Shanghai. But the restrictions from which businessmen in Tientsin will suffer most in the aggregate will not be those now being imposed and against which complaint is made. They as well as American businessmen in other parts of China will suffer more from embargoes of various kinds, both import and export, stringent exchange regulations, discriminatory practices, transportation and other monopolies and in general the conduct of competitive business with a low overhead and through Chinese connections. The German businessman will suffer along with the individual American and British businessman and this condition may obtain for some time. There are some however who hold that in the ultimate American trade as a whole may not suffer as much as the present trend might lead one to believe but this is debatable and only the passage of time will reveal whether the theory is sound. It might well prove to be true in certain lines of trade such as automobiles, airplanes and certain kinds of railway equipment. The coming year should definitely determine whether American trade will be able to survive in Tientsin and other parts of China.

Code text by mail to Chungking, Shanghai, and Tokyo.

  1. None printed.