740.0011 Pacific War/3409
The Chargé in China (Atcheson) to the Secretary of State
[Received September 1.]
Sir: I have the honor to enclose a copy of despatch No. 19, July 26, 1943,5 from the Consul at Kweilin, in regard to Japanese economic warfare policy in south China. Material in this despatch supplements information transmitted in the Embassy’s telegram No. 1270, July 23, 8 p.m.;6 in despatch No. 1419, August 3, 1943,7 subject: “Conditions in Kwangtung Province”, and in airgram A–28, August 4, 9 a.m.8
The despatch from the Consul at Kweilin may be summarized as follows:
The form of economic warfare waged by the Japanese against south China is simple and effective. By offering generous profits, they are able to obtain enormous and increasing quantities of foodstuffs and raw materials in exchange for superfluous manufactured goods, including looted products, and depreciated and often counterfeit currency. In this activity, they are abetted by unscrupulous Chinese merchants and corrupt Chinese officials. The apparent major aim of the Japanese, in which they have been conspicuously successful, has been to create an artificial food shortage through blockade of imports, [Page 86] hoarding, and leakage to occupied territory, thus bringing about malignant inflation and resultant economic depression. The Japanese scheme of economic warfare in south China has been as demoralizing as a military occupation and successful results have been achieved at a minimum cost in men and money.
Attention is invited to the last paragraph of page two of the despatch, in which the Consul comments on the smuggling of salt and wolfram from the unoccupied to the occupied areas and in which the following statement appears: “Competent official observers of the U. S. Government have even reported having seen wolfram laden trucks owned by the National Resources Commission making their way eastward from the railhead at Kukong.” The Embassy is instructing the Consul to investigate further.
Respectfully yours,