The Consul General at Shanghai (Gauss) to the Secretary of State

No. 18

Sir: I have the honor to refer to the general question of Japanese monopolization of commercial shipping on the Yangtze River, and to give below certain information which has become available with respect to the control being enforced, under Japanese direction, over all nonsteam craft engaged in transport services on the Yangtze River, over lighters operating in the several harbors along that river and over the harbor facilities of those several river ports. Of interest in that connection is the clear indication that the control thus exercised is [Page 782]conceived for the express purpose of fostering Japanese shipping on the Yangtze River.

There is enclosed a translation7 of a mimeographed document in Japanese which purports to describe the organization, functions and objectives of the “Nanking Transport Company”. A survey of that document indicates that the following principal objectives were envisaged through the organization of the company:

Strict supervision over sailing craft on the Yangtze River with a view to preventing their operation from offering competition to Japanese steamship services.
Relegation of sailing craft on the Yangtze River to the role of feeders to the principal ports, beyond which, Japanese steamship services are available.
Preventing any assistance being given to hostile Chinese forces by Chinese-owned or -operated sailing vessels.
Control for the benefit of Japanese shipping of river harbor facilities, including cargo lighters, warehouses and wharves.

According to a Japanese representative of the firm, the aforementioned document was prepared some months ago when the firm was being organized. He added, however, that the organization, functions and objectives of the firm remain substantially unchanged although certain adaptations to prevailing circumstances have been found necessary. According to the company representative, the firm is now operating in the section of the Yangtze River between Shanghai and Wuhu although the ultimate expansion of its sphere of activities to Hankow is definitely contemplated. He explained that so far emphasis has been laid principally upon the supervision and control of the movements of sailing craft which continue to be operated by their Chinese owners and he intimated that the imposition upon those craft of license fees or fees for supervision was being found necessary to defray expenses incurred by the organization in the performance of its regulatory functions.

It was admitted by the representative of the Nanking Transport Company that there exists a close relation between his organization and the (Japanese) Nisshin Kisen Kaisha (which latter shipping firm has operated extensively for many months on this part of the Yangtze River). It has not been ascertained, however, whether this is tantamount to complete dictation of policy and control over the activities of the Nanking Transport Company by the Japanese shipping firm, for the latter’s benefit, or whether some measure of autonomy has been retained by the Nanking Transport Company.

While the avowed purpose in organizing the Nanking Transport Company was to foster the development of Japanese shipping enterprise on the Yangtze River, it cannot be foreseen with any certainty [Page 783]how its operation will ultimately affect river shipping. The apparent intention to concentrate more completely in Japanese hands control of all shipping facilities through the elimination of competition from even the typically native Chinese shipping enterprise, appears to offer little encouragement for the view that a voluntary relaxation of the Japanese commercial shipping monopoly on the Yangtze River is being seriously contemplated. Moreover, it will be a matter of the greatest economic significance, to all parties interested in the commercial life of this area, if an effective Japanese monopoly of all transport facilities leading into and out of the Yangtze basin is achieved.

It has not yet been learned in what manner sanction has been obtained from either the Japanese authorities or the Japanese-sponsored Chinese regimes in this area for the exercise of the large regulatory powers contemplated in the organization of the Nanking Transport Company. It may be safely assumed, however, that such official sanction must precede the application of the contemplated measures of control, or that the actual impetus for the establishment of the organization comes from official sources.

Respectfully yours,

For the Consul General at Shanghai:
O. Edmund Clubb

American Consul
  1. Not printed.