893.5151/460: Telegram

The Consul General at Shanghai (Lockhart) to the Secretary of State

676. Local firms, especially oil and tobacco companies, are bitterly complaining against the exchange restrictions. Last week the Chinese authorities declined to grant any exchange to the two leading American oil companies and to several of the tobacco firms. Apparently two tobacco companies were granted the amounts of exchange applied for but local banking authorities state that this was through error and that the Chinese will not henceforth approve applications for exchange for oil and tobacco companies. Other American firms are also suffering lack of exchange facilities and are finding it increasingly difficult to carry on trade. A continuation of this restrictive policy, while no doubt based on sound financial and political policy from the Chinese Government point of view, is a serious barrier to normal trade activity and American firms are greatly concerned over the outlook.

Repeated to Hankow and Peiping.