"This channelling of the movement of goods is effected primarily by means of exchange control exercised under the authority of regulations issued 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 assur-"ances of the Japanese Government that it would be maintained in that "grea.
"The Government of the United States is now apprehensive lest there develop in other areas of China which have been occupied by Japanese military forces since the beginning of the present hostilities a situation similar in its adverse effect upon the competitive position of American business to that which now exists in "Manchuria.
"On April 12, 1938, I had occasion oto invite the attention of Your Excellency'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 ide Japanese Scverament 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 principle of equal opportunity or the open door in China no specifi¢ 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 at Tientsin and Shanghai. A somewhat similar situation apparently prevails Chefoo. Furthermore, reports con-gi tinue to reach the American Government that a comprehensive system of exchange control will soon be established, throughout North China. Control of foreign exchange transactions gives control of trade and Commercial enterprise and the ex-"relic, either directly or indirectly by the Japanese authorities of control of exchange in North China would place those authorities in position io greatly impede free competition between Japan and the United States Japanese Government that altera-American Government therefore finds tions of the Chinese customs tariff it all the more difficult to reconcile by the regimes functioning in those itself to a situation in which Amer-portions of China occupied by Japanican nationals must contend with conese armed forces and for which the tinuing unwarranted interference Japanese Government has formally with their rights at the hands of the assured its support are arbitrary and Japanese authorities in China and illegal assumptions of authority for with Japanese actions and policies Which the Japanese Government has which operate to deprive American an inescapable responsibility.
It is trade. and enterprises of equality of hardly necessary to add that there opportunity in China, It is also per-can be no equality of opportünity or tinent to mention that in Japan, too, Open door in China so long as the American trade and other interests are ultimate authority to regulate, tax, undergoing severe hardships as a re-or prohibit trade is exercised, when sult of the industrial, trade, exchange ther directly or indirectly, by the and other controls which the Japan-authorities of one foreign' Power in ese Government has imposed incident furtherance el the' interests of that to its military operations in China. Power.
Treaty Obligations "It would appear to be self-evident "While American interests in the that a fundamental prerequisite of a Far East have been thus treated at condition of equality of opportunity the hands of the Japanese authorities or open door in China is the absence the Government of the United States in the economic life of that country has not sought either in its own of preferences or monopolistic rights territory or in the territory of third operating directly or indirectly in countries to establish or influence the favour of any foreign country or its establishment of embargoes, import nationals.
On July 4 I spoke to prohibitions, exchange controls, pre-General Ugaki of the desire of the ferential restrictions, monopolies or American Government that there be special companies designed to elimin-avoided such restrictions and obe or having the effect of eliminate stacles to American trade and other ing Japanese trade and enterprise. enterprises as might result from the In its treatment of Japanese nation-setting up of special companies and als and their trade and enterprise, monopolies in China. The Minister the American Government has been Was so good as to state that the open guided' not. only by the letter and door in China would be maintained spirit of the Japanese-American and that the Government of the commercial treaty of 1911 but by United States might rest assured that those fundamental principles of inthe Japanese Government would ternational law and order which have fully respect the principle of equal formed the basis of its policy in re-opportunity. gard to all peoples and their interests; and Japanese commerce and Communications Monopoly enterprise have continued to enjoy "Notwithstanding these assurances, in the United States equality of opthe, provisional regime in Peiping portunity; announced on July 30 the inauguration, as of the following day, of the China Telephone and Telegraph Company, the reported purpose of this organization being to control and to have exclusive operation of telephone and telegraph communications in North China. There was organized in Shanghai on July 31 the Central China Telecommunications Company, and the special service section
Text read from the printed page and cleaned; old type leaves the occasional error.