"This channelling of the movement of goods is effected primarily by means of exchange control exorcised under the authority of regulations {ssued: under an enabling law which provide expressly that for the purposes of the law Japan shall not be considered a foreign country nor the Japanese yen a foreign currency. In the opinion of my Government equality of opportunity or the open door has virtually ceased to exist in Manchuria notwithstanding the assurances of the Japanese Government that It would be maintained in that "The Government of the United States is now apprehensive lest there develop in other areas of China which have. been occupied by Japanese inllitery forees since the beginning of the present hostilities a. situation similar in its adverse effect upon the competitive position of American'
Dusiness to that which now exists in Manchuria.
"On April 12, 1998, I had occasion to invite. the attention of Your Excollency's predecessor to reports which had reached the Government of the United States indicating that discrimination in favour of Japanese trade with North China was likely to be effected by means of exchange control and ask for assurances that the Japanese So vernment would not support or countenance financial measures discriminatory against American enterprises. Although the Minister for Foreign Affairs stated then that the Japanese Government would continue to support the prin ciple of equal opportunity or the open: door in China no specific reply has yet been made by the Japanese Government on the subject of these representations, Tsingtao Restrictions "The Government of the United States now learns that the Japanese authorities at Tsingtao have in effect established an exchange control, that they are exercising a discriminatory authority to prohibit exports unless export bills are sold to the yokohama Specie Bank, and that the Bank refuses to purchase export bills except at an arbitrary rate far lower than the open market rate prevailing Tientsin and Shanghai. "A. somewhat similar situation apparently prevails at Chefoo. Furthermore, reports continue to reach the American Government that a comprehensive system fof exchange "control will soon be established throughout North China, Control of foreign exchange transactions gives control of trade and commercial enterprise and the ex-
Text read from the printed page and cleaned; old type leaves the occasional error.