Foreign Relations of the United States Diplomatic Papers, 1938, The Far East, Volume IV

893.61331/110: Telegram

The Consul at Tsingtao (Sokobin) to the Secretary of State

Tsingtao, September 16, 1938—4 p.m.
[Received 8:30 p.m.]

1. The Japanese special agent of the army mission in Tsingtao with which the American firm Universal Leaf Tobacco Company of China, Federal Incorporated, Universal [U. S. A.,] has been negotiating for permission to purchase leaf tobacco at stations in the interior along the railway between Tsingtao and Tsinanfu has informed the company as follows:

“Referring to your letter dated September 2, requesting permission to purchase leaf tobacco in the zone of military operations, we hereby inform you that no matter on what scale you may purchase we cannot grant permission unless you purchase product [on] same conditions as the Yee Tsoong Tobacco Company.”

2. The conditions referred to relate to the agreement mentioned in the Consulate’s telegram April 20, 9 a.m.⁷⁰ whereby the British firm undertook to purchase yen at the official rate of exchange.

3. In an interview with Japanese Consul General, I pointed out that the American Company did not export Shantung leaf tobacco except in small quantities; that practically all its leaf tobacco was sold in China or Manchuria to British, Japanese, and Chinese firms and that its position in leaf tobacco trade in China was certainly no different from its Japanese, Chinese and British competitors engaged in purchasing leaf tobacco at stations along the same railway. The Japanese firms in fact are exporting to Japan. The Consul General was adamant in his refusal to give any facilities or permission to the American firm to operate in the interior and he insisted that the firm would be required to purchase exchange before it would be permitted to do business up country.

4. The British Company mentioned above will commence buying in interior Monday; Japanese firms are and have been operating for months, as have Chinese dealers. While the British firm in which there is considerable American capital has been required to purchase yen, neither the Japanese nor Chinese companies have been forced to do so. The above named American company is being discriminated against so far as Chinese and Japanese companies are concerned and it is suggested that the Embassy at Tokyo be instructed to bring this interference with American trade and discrimination against an American company to the attention of the Japanese Foreign Office.

Sent to Peiping, paraphrase by mail to Tokyo and Chungking.

Sokobin

70. Not printed.