393.115 Associated American Industries/7: Telegram
The Secretary of State to the Consul General at Shanghai (Gauss)
Washington, October 12, 1938—6
p.m.
581. Your 1302, October 6, 4 p.m., regarding lease of Chinese enterprises by Associated American Industries.
- 1.
- If you have no reason to question the reality and good faith of the alleged American financial interest in and American control of the corporation, the Department is of the opinion that you may properly inform the Japanese of the facts as known to you and request proper recognition of the legitimate American interests involved.
- 2.
- It is noted, however, that (a) the corporation was formed (principally for the purpose of rebuilding and re-equipping Chinese factories and for their operation under lease) after the beginning of the current hostilities in China with full knowledge of the risks involved and (b) while the alleged American financial interest in the corporation constitutes a majority of the stated paid-in capital, it represents only a small percentage of the total authorized capital. The 75 percent not yet paid in might possibly be taken up by aliens with resulting control by them. With these considerations in mind the Department is of the opinion that, if you should feel warranted in taking any action, your action should be within the limits indicated in the first paragraph of this telegram and should not include intervention in the event that the Japanese oppose the corporation’s activities as described.
Hull