nection, the Department considers it unnecessary and inadvisable to
have the American Consul General at Mukden make at this time to
the Manchukuo regime any statements in regard to the matter. De-
partment suggests that you emphasize that the proposed monopoly
would contravene Article 3 of the Nine-Power Treaty as well as Ar-
ticle 15 of the Sino-American Treaty of 1844 and Article 14 of the
Sino-French Treaty of 1858 and would violate the principle of the
open door which Japan is committed to uphold and which it has de-
clared that it will uphold.
  Repeat to Peiping as Department's No. 198, 7 p. m. in reply to its
286, July 2, 5 p. m.
                                                           H-ILL

893.6363 Manchuria/29
Memorandum by the First Secretary of Embassy in Japan (Dick-
  over) of a Conversation With the Chief of the Commercial Affairs
  Bureau., Japanese Foreign Ofce (Kurusu) 7

                                           [TOKYO,] July 9, 1934.
  Mr. Kurusu said that our informal memorandum on the Manchu-
rian oil monopoly question 8 had to be studied by two bureaux, the
Asiatic Bureau and his, and that the memorandum had not yet come
to him. He said that he thought that the foreign companies were tak-
ing the matter too seriously-that the idea was not to put them out
of business, either in Japan or in Manchuria, but to build up domestic
refining industries in both countries, as a matter of national defense.
  He then said that he wanted to ask me about a report which he had
heard to the effect that the foreign oil companies were considering
the placing of an embargo on the exportation of crude oil to Japan,
if the Japanese and "Manchukuo" governments continued to take
measures to restrict the foreign companies' business.
  I said that I knew almost nothing about the matter. I had first
seen the matter mentioned in the minutes of the Oil Control Bill
Committee of the Diet, where a member had expressed a fear that
some such step might be taken by the foreign oil companies. I said
that I had asked an American oil man about the possibility of such an
embargo, and had been told that there were so many independent
oil companies in California, Mexico, Venezuela and elsewhere, that
an oil embargo would hardly be practicable. It had been explained
to me, however, I said, that California crude, because of its higher
gasoline content, was almost indispensable to the profitable operation

  "Copy transmitted to the Department by the Ambassador in Japan in
his
despatch No. 887, July 12, 1934; received August 6.
  Dated July 7, 1934, Foreign Relations, Japan, 1931-1941, vol. I, p. 130.
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