611.51G9/32: Telegram

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

32. Reference my telegram No. 24, February 27, 5 p.m. I am reliably informed that the Governor General, in reply to his recent intervention on behalf of American-owned cargo, has received a letter from General Sumita under date March 5 to the effect that: first, all transit cargo in Indochina regardless of nationality if at any time [Page 107] destined for free China is considered as having been destined for the Chungking Government and none of this may be reexported or moved for the time being; and second, the local Japanese authorities are awaiting instructions from Tokyo as to the action to be taken with regard to merchandise that is specifically American.

An official of the Economic Section of the Government General points out that the Japanese are making a distinction between transit cargo and merchandise which is in bond in Indochina without a declared free China destination (comparatively a small amount French and German, chiefly that which arrived in Indochina subsequent to the closing of the frontier with China). He believes that the statement that all transit cargo is considered as having been destined for the Chungking Government is a preliminary to its seizure by the Japanese.

I believe that the Japanese [in] Indochina [will require?] so much evidence of American ownership as to delay action indefinitely. I do not believe that the Japanese have any immediate intention of releasing the major part of the merchandise in bonded warehouses in Indochina (either [American] or other cargoes) and that they are purposely delaying the permission of reexportation until political developments indicate that they may seize this merchandise without fear of repercussions or that it is politically expedient for them to release at least a part of the bonafide American-owned cargo.

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