033.1100 Rogers, James H./76: Telegram
The Ambassador in Japan (Grew) to the Secretary of State
[Received July 6—8:55 a.m.]
148. For Morgenthau45 from Rogers.46 After a few days in Manchuria a very superficial view of economic situation yields one conclusion on which I am confident; viz, the economic set up is effectively designed to keep complete control of key industries in the hands of Japanese Government. This is accomplished as follows: in each [Page 215] important industry is being organized a government-sponsored company, controlling interest being subscribed by one or more of the following groups—South Manchuria Railroad, Mitsui, Mitsubishi, and/or certain leading Japanese companies in related industries. Since cooperation between most of these interests and the Japanese Government is almost complete, direct government stock subscription is usually unnecessary although sometimes present.
Other companies desiring to organize in any of these key industries must receive special government permits which to date have rarely been granted even to Japanese firms. Hence the companies thus controlled by Japanese Government are virtually monopolies and since what constitutes key industries is open to redefinition from time to time almost any important economic activity can be brought under similar control.
American oil companies are being subjected to discriminating import duties and quotas are operative. Among representatives of American business and banking as well as among consular officials and foreign newspapermen the opinion seems unanimous that American and most other foreign business will in this way be squeezed out in a very few years—even more completely than has occasioned in Japan.