893.61331/312: Telegram

The Ambassador in China (Gauss) to the Secretary of State

35. Reference my despatch No. 72 of July 2124 regarding Chinese monopolies. Learning that the Minister of Finance, despite contrary counsel of government advisers, is [proceeding] with his plans for monopolies reforming [sic] a salt monopoly was actually being established effective January 1, I approached the Minister of Finance informally for information regarding a reported tobacco monopoly, expressing the concern of American leaf and other tobacco interests. He replied that monopoly of sale of cigarettes is being planned but it has not yet completed the legislative procedure and that all Chinese and foreign cigarette merchants are enjoying the same treatment in regard to tax laws and that there is no discrimination.

Inasmuch as the institution of monopolies will require heavy financial outlay, I have little doubt that the monopoly plans of the Minister of Finance are actually related to the loan which China hopes to obtain from the United States and Britain. It seems to me that the opportunity is now presented if we propose to entertain the Chinese request for financial aid25 to make known to the Chinese Government [Page 497]that we are not prepared directly or indirectly to [finance?] expensive and harmful restrictive monopolies.

  1. Not printed.
  2. For correspondence on this subject, see pp. 419 ff.