The Secretary of State to the Chargé in Japan (Dooman)
229. Your 359, July 24, 6 p.m., in regard to the blocked funds of the American President Lines. It is not clear to the Department [Page 473] from your telegram under reference whether you have presented to the Japanese Government the considerations and desiderata set forth in the Department’s no. 177, June 29, 6 p.m., and no. 209, July 21, 4 p.m. If you have not done so, the Department desires that, unless you have substantial objection—in which case the Department would like to have your views—you seek an early occasion to take the matter up with the Foreign Minister.
The Department considers it especially important that the Japanese Government be informed that this Government expects that the Japanese Government will establish some effective system for the prompt and regular transfer of the steadily accruing revenues of American shipping companies. This Government desires to be informed of an approximate date on which it may expect a reply from the Japanese Government and it is hoped that you will be able to elicit some definite immediate response on this subject and report thereon to the Department.
Obstruction to the transfer to the home office of earnings of a shipping company in a foreign country over and above its expenses there, obviously runs counter to the universally recognized principle that governments shall avoid flag discrimination even in favor of the shipping under their own flag. This has been generally recognized and, so far as concerns American shipping, arrangements have been made by American shipping companies with governments practising exchange control to assure prompt transfer of the companies’ legitimate net earnings. The American lines now doing business in Japan find their operations hampered and their competitive position impaired by the delays recently imposed by the Japanese authorities on transfer of their net earnings. The payments involved are not large in absolute amount and this Government expects that the Japanese Government, which draws large amounts of foreign exchange from the earnings of its shipping transactions in the United States, will so operate its exchange control as to give practical effect to the principles of non-discrimination and national treatment by which international shipping is regulated. In future conversations with the Japanese Foreign Office in regard to this matter you may use the foregoing argumentation in addition to that contained in the previous telegrams on this subject.
With regard to the last paragraph of your telegram under reference, the position of the Department in this matter would extend to all American shipping companies regardless of ownership. The Department prefers that the question of ownership of the American President Lines be not raised with the Japanese Government.