893.61331/123: Telegram
The Ambassador in Japan (Grew) to the Secretary of State
Tokyo, October 20, 1938—7
p.m.
[Received October 21—9:24 p.m.]
[Received October 21—9:24 p.m.]
676. Peiping’s 611, October 9, noon. Universal Leaf Tobacco Company.
- 1.
- Covington, president of company, called today at the Embassy, when we read to him paragraph 1 of the telegram under reference. He pointed out that there were several important inaccuracies in the statement made to the Embassy at Peiping by the secretary of the Japanese Embassy. In regard to these inaccuracies, he stressed that the company’s offer to purchase $300,000 North China currency worth of foreign exchange had never been accepted by the Japanese; that the company is still prepared to purchase a limited amount of foreign exchange; and that no question of discrimination against the British-American Tobacco Company would arise if the Universal Leaf Tobacco Company were allowed to operate for the reason that the B. A. T. are manufacturers of cigarettes whereas the American Company, which has no connection with the B. A. T., are strictly dealers in leaf tobacco.
- 2.
- Covington authorizes us to inform the Japanese, both in Tokyo and in Peiping, that the company cannot accept the same proposition which was accepted by the B. A. T., namely, to purchase foreign exchange to the value of one-half of the amount in North China currency available for the purchase of tobacco, for the reason that the American Company would be unable to compete with their Japanese and Chinese competitors who are not required to make any purchase of foreign exchange. The company is, however, prepared to purchase foreign exchange to an amount not exceeding $200,000 North China currency, provided that (a) no further demands are made on them for further purchases of foreign exchange; (b) equal rights with Japanese and Chinese regarding transportation facilities and protection are assured.
- 3.
- We intend with the Department’s approval to present to the Foreign Office an informal letter in which reference will be made to the conversation reported in Peiping’s 611, and continuing substantially along the lines of the preceding paragraphs.
- 4.
- Covington is directing G. A. Arbogast, of the company’s branch at Shanghai, to proceed to Peiping via [?] for consultation with the [Page 75] Embassy at Peiping. It is suggested that Peiping repeat this telegram to Shanghai in order that the substance therein may be communicated to Arbogast.
Department’s October 7, 5 p.m. to Tsingtao was sent by that office by mail. Embassy is repeating message by telegraph today to Tokyo [Peiping?], also to Shanghai. Repeated to Chungking, Tsingtao and Shanghai.
Grew