Foreign Relations of the United States Diplomatic Papers, 1934, The Far East, Volume III

893.6363 Manchuria/32: Telegram

The Minister in China (Johnson) to the Secretary of State

Peiping, August 11, 1934—noon.
[Received 5:19 p.m.]

354. Your 132, August 4, noon to Tokyo.¹⁷

1. Perusal of the Legation’s files in reference to this matter indicates there is about to be set up in Manchuria a “Manchukuo” government monopoly for the sale and distribution of kerosene.

2. “Manchukuo” exists by the favor and support of the Japanese Government.

3. The Japanese Government has indicated that it does not intend to intervene with its protégé on behalf of American interests which will be affected by this subsidiary monopoly. Obviously it serves Japanese (military) interests that an area, restricting sale of petroleum products, should be created in Manchuria to favor the development of a market for the higher-priced petroleum products of the oil shale refinery now being developed at Fushun.

4. Furthermore, the state of world production and competition in kerosene products permits, if it does not encourage, the setting up of just such machinery as has been devised for the purpose of controlling the sale and distribution of those products in Manchuria. Similar developments are already present in the consuming areas of China.

5. There would be, naturally, nothing for American producers to do but to negotiate with monopoly for sale of crude oil and prepare to liquidate their distributing machinery in Manchuria.

Repeated to Tokyo.

Johnson

17. Not printed; it requested information.