893.24/927: Telegram

The Consul at Hanoi (Reed) to the Secretary of State

23. The Secretary General this morning confirmed that the loading of cargo at Haiphong for shipment to foreign ports is prohibited for time being and until an investigation is made of the nature and ownership of the cargo. He explained that the discovery of gas masks on the Sikiang (the vessel chartered by the United States Far Eastern Trading Corporation) has caused the Japanese to demand that “Chinese merchandise” be prohibited re-exportation. I pointed out that the Standard-Vacuum Oil Company and the Texas Company [Page 195] were now loading petroleum products for which the Government General had already authorized re-exportation to Hong Kong, that similar permits have been granted to other American companies (Du Pont, et cetera) for re-exportation of goods the title to which had never passed to the Chinese purchasers and I emphasized that the above shipments could not be classified as “Chinese merchandise”. The Secretary General, after consulting other officials, regretted that he could not give me an answer until later and after he had consulted the Japanese mission. I stressed the matter as being urgent, that the goods in question were American property and that there should be the least possible delay in rescinding the prohibition. During the conversation I spoke only of the above-mentioned companies and refrained from any mention of the affairs of the United States Far Eastern Trading Corporation.

It is apparent that the Japanese seized upon the gas masks incident to tighten their control of Haiphong and strengthen their position vis-à-vis the Government General which must now defer to a large extent to Japanese desires. It is understood that the Japanese protest to Vichy caused the cessation of British vessels and airplanes calling at Indochinese ports. It is possible that the present difficulty will be settled satisfactorily but it is fairly certain that conditions will become more onerous and the Japanese will assume greater control of Tongking affairs to the detriment of American and British interests.

Sent to Cavite for repetition to the Department, Chungking, Peiping, Hong Kong, Shanghai, Canton.