851.503193 Manchuria/23
The Ambassador in Japan (Grew) to the Secretary of State
[Received March 12.]
Sir: I have the honor to refer to my telegram No. 25, of February 12, 1934,52 in regard to French investment in Manchuria and to my confidential telegram No. 29, of February 26 [16], last,52 on the same [Page 43] subject, which indicate renewed interest on the part of Western financial groups in that region.
The Department will recall that at different times ever since the Russo-Japanese war there have been syndicates or other organizations formed for the purpose of exploiting Manchuria, whose potential wealth and purchasing power have been widely heralded. Perhaps the best known American venture, aside from the proposed Chinchow–Aigun Railway,53 which never was built, was the project to develop scientific agriculture on a large scale. This seems to have been a joint venture on the part of a number of young men from the Chinese Customs service. They enlisted the backing of the Governor of Kirin Province, who arranged for them to obtain the land, and the International Harvester Company, who furnished the agricultural machinery. This project came to nothing, owing to banditry, poor transportation and other political and social difficulties beyond the control of the promoters. At other times there have been mining ventures and innumerable attempts on the part of individual merchants to found stable concerns. For the most part they have not succeeded.
The reasons for failure appear to have been largely political. Manchuria has never hitherto had an effective government, and the conflicting national ambitions which have been the dominant feature of life in that region have militated against sound business growth. Except for the export of beans and its products and perhaps a few other items, business has been largely dependent upon the political projects of those who happened to be in power.
The situation is not essentially different at this time. It looks somewhat different because the Japanese are in control, for all practical purposes. The South Manchuria Railway is a prosperous enterprise because it has had the political backing of Japan, and there is every evidence that it will continue to have this backing. Accordingly the French group of financiers and industrialists desire to deal with it. The French interests apparently believe that the South Manchuria Railway is the only concern with which it will be safe to deal on a large scale.
The German interests are in a different position. For many years Germany has been a large purchaser of soya beans from Manchuria. Germans have been selling merchandise and machinery there for an equal period. Germans were large creditors of Chang Hsueh-liang before the present regime came into control, and they have been doing business with the new Government as well. Owing to their large purchases in Manchuria they have been regarded with favor. Besides, it is obvious that Germany has, and can have, no political [Page 44] projects in the Far East. German interests are purely commercial, but they are substantial, and German goods are regarded highly, in Japan at least.
In these circumstances, the Germans have begun an intensive study of the Manchurian situation from the standpoint of commercial development. There have been rumors to the effect that Germany was about to recognize “Manchukuo” in return for commercial favors. Discussion with the staff of the German Embassy here does not give that impression. The Germans intend to obtain all the commercial advantages they can, but apparently the recognition of “Manchukuo” is too high a price to pay for what may not turn out to be much. One member of the German Embassy stated that the determining factor in the situation was the relationship between Japan and Russia; that “Manchukuo” was not master in its own house; that until there was some measure of acceptance of the new state by China and/or Russia, he could not recommend his Government to do anything drastic; that Germany had been compelled to give up extraterritorial rights in China, and that consequently the Germans there were defenceless against Chinese resentment; that if Germany were suddenly to recognize “Manchukuo” without some degree of understanding with the Chinese, it might go hard with German individuals and commercial enterprises in China proper; that while the potential value of trade in Manchuria might be enormous, its immediate value was not sufficient, in his judgment, to warrant any great risks.
It seems probable, therefore, that the de jure recognition of “Manchukuo” at this time is not imminent, although the Germans and perhaps others may find it convenient to deal directly with “Manchukuo” officials through their consular officers in Manchuria, without raising the question of recognition.
Respectfully yours,
- Not printed.↩
- Not printed.↩
- See Foreign Relations, 1910, pp. 231 ff.↩