893.5151/569: Telegram

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

105. Reference Tientsin’s 17, February 25, 4 p.m., and Peiping’s 94, February 22, 11 a.m.98

In a conversation with a foreign press correspondent last week, a secretary of Wang Keh Min99 stated that all elements (meaning the various Japanese factions) were finally united as to the attitude to be adopted towards exchange and export control and that it had been decided to adopt such control measures as from March 10. At the same time the Secretary said that Wang Keh Min was opposed to the control measures on the ground that North China would suffer and that the Chinese would bear the brunt of such suffering.
Conversations yesterday and today with officials of the Japanese and British Embassies and an American banking source tend to confirm the above information that the Japanese appear to be determined to carry through their economic and financial policies.
The Japanese official interviewed admitted that it will be difficult to put exchange control into effect without trade control. He hastened to add that for the time being at least control measures will apply only to exports. When it was pointed out that there were already export restrictions on certain staple goods (cotton, wool, mineral oils, et cetera), he stated that numerous other articles mentioning peanuts and certain oils specifically would be placed under control. He foresaw a period during which trade would gradually drift southwards but optimistically concluded that everything would ultimately be adjusted to “everybody’s satisfaction”.
The British interpret “everybody’s satisfaction” as meaning Japanese satisfaction and believe that the Japanese do not care what happens to North China trade so long as they get what they require from North China. The British official interviewed was very pessimistic as to the future of trade especially for foreigners in North China. In this view I concur.

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

  1. Latter not printed.
  2. Chairman of the Executive Committee of the “Provisional Government” at Peiping.