893.5151/461: Telegram

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

251. I am advised that Chinese authorities are refusing to issue exchange to oil companies because they have been selling oil to Japanese and remitting funds on exchange issued by Chinese Government, and that exchange is being denied tobacco companies because of transactions between tobacco companies and Japanese whereby tobacco companies are furnishing exchange granted by the Chinese Government in return for notes of Federal Reserve Bank in North China which they are using to purchase tobacco in Shantung.

Repeated to Nanking and Shanghai.