893.6363/162: Telegram

The First Secretary of Embassy in China ( Salisbury ) to the Secretary of State

409. Embassy’s 269, April 29, 5 p.m.31 Reuters translations of yesterday from Tientsin.

Yung Pao (Japanese) of June 30 reports substantial progress toward formation of a petroleum control company to be known as “North China Petrol Limited Company”, which will start business as soon as approval of Chinese (Provisional) and Japanese Governments is received. Company is to be capitalized at $20,000,000, one half paid in, 80 per cent of the paid-in capital to be provided by Japan Petrol Company, Manchurian Petrol Company, Chosen Petrol Company and Sun Petrol Company; 10 per cent by Standard Oil, Texas Company and Asiatic Petroleum; remaining 10 per cent by owners of oil tankers. Measures for development and utilization of the Tahua Oil Company are reportedly being considered. News item concludes:

“Handicapped by the inability of getting foreign exchange following the issue of new notes and outsold by the cheaper Japanese oil, the business of the three foreign oil concerns has registered a marked decline and the Japanese oil has practically dominated the market. At present, only Japanese oil is being sold along the Tsinpu,32 Peining,33 Kinpao (Peiping-Suiyuan), and Kinhan34 Railways. The end of American and British oil in North China is clearly in sight.”

Standard Oil here has heard nothing of the reported move but states that the Tahua Company, formerly the Sino-Soviet enterprise now under complete control of the Japanese Ido Mitsu interests, has recently been underselling Standard Oil gasoline by about $1.50 local currency per 10–gallon unit and kerosene by about $1.30; that the Japanese Agura Oil Company, however, has been unable to move its [Page 22] stocks from Japan into North China and cannot itself purchase petroleum products from Standard Oil (although it has indicated its interest in obtaining American stocks) because of inability to acquire the necessary foreign exchange.

Repeated to the Ambassador and Shanghai. By mail to Tokyo and Tientsin.

  1. Not printed.
  2. Tientsin–Pukow.
  3. Peiping–Liaoning (Mukden).
  4. Peking (Peiping)–Hankow.