394.1153 Smith Company, Werner G./31: Telegram
The Consul General at Shanghai (Lockhart) to the Secretary of State
[Received 8:20 p.m.]
1016. Second paragraph of my No. 926, June 29, 4 p.m., and my 985 [980?], July 11, 4 [10?] p.m., and paragraph 1 of Nanking’s 134, July 12, 3 p.m.
1. I had another conference with the Japanese Consul General yesterday concerning the wood oil case. The history of the case was reviewed and the net result may be summed up by a suggestion from [Page 411] Hidaka that the Japanese naval authorities would probably (he declined to make a definite commitment) be willing to consent to the release of the wood oil if the owners would agree to store it in a godown at Nanking, preferably Ho Gee’s [International Export Company’s]. I told Hidaka that this would entail additional hardships and financial losses to the owners of the property because of storage charges and lack of access to the market and that our chief concern remained as heretofore, which was the release of the wood oil with permission or facilities for its transportation to Shanghai so that it could be put on the market. I asked Hidaka frankly to inform me whether he thought the Japanese naval authorities at any time had suspected Chinese ownership or interest in the wood oil and he answered that no such suspicions had existed. Throughout the conversation I emphasized the strictly commercial character of the commodity, its American ownership and the unwarranted interference with a normal trade transaction of an American firm. I was unable to exact from Hidaka any clear statement of the exact reasons for the prolonged detention of the wood oil by the Japanese naval authorities and their refusal for its transport down the river. In the end, and at Hidaka’s request, I agreed to submit to the Department again the offer of the Japanese to release the wood oil, this time with the possibility that, instead of permitting it to lie afloat in junks in the harbor at Nanking near an American naval vessel, the oil could be stored in a godown there. I told Hidaka that if this offer should be accepted he could well expect me to press him after delivery and storage of the cargo, for permission, or facilities, for the transport of the oil down the river to Shanghai. If the Japanese are willing to release the oil with a permit for its storage ashore, I am disposed to believe that the offer should be accepted inasmuch as there is less likelihood of the oil deteriorating or being stolen while in storage in a godown than in its present location in junks some miles up the river from Nanking.
Repeated to Hankow, Nanking and Tokyo.