Evening Star Newspaper, January 30, 1933, Page 11

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HSINKING (CHANGCHUN), Man- chukuo, December _19.—Manchukuo officials with whom I have discussed the economic situation in Manchuria as regards foreign business declare that the new state has no intention | of violating the principles of the open door, As far as tariff is concerned, Man- chukuo has not yet put into efféct any legislation which in theory violates the principle of equal trade opportunities for all foreign nationals. But the overthrow of the former Manchurian regime has resulted in the extinction of a flourishing trade which existed in Mukden prior to September 10, 1931, Dbeiween several larga forelgn importing firms and the government headed by Chang Hsueh-liang. It is not accurate to say that the open door has been closed. What actually has happened is that that particular market is now non-existent. Take, for example, the Mukden Arsenal, the largest in the Far East #f not the largest single arsenal unit in the world. Prior to the Japanese occu- pation of Manchuria, & number of for- eign importing firms had been carrying on a lucrative business with this gov- ernment institution. When the Japan- ese forces captured Mukden, the arsenal was closed. Consequently its particular buying power has been eliminated from the Manchurian market—eliminated, let vs say, for Japanese as well as other foreign firms, but, nevertheless, eliminated. Barometer of 15 Months. The reduction of the foreign stafls of most American firms doing business in Mukden is an accurate barometer of the decrease in business during the past 15 months. This statement also applies to the majority of British, Ger- man and a number of other foreign firms. Jardine, Matheson, large importers of British engineering and machinery equipment, closed its. Mukden branch in Mey of this year. On November 1, Anderson & Meyer, importers of Amer- jcan machinery and electrical equip ment, liquidated its Harbin office. ‘The trade losses of foreign firms in Manchuria during last year must be attributed to a combination of causes, some of which are probably only tem- porary. The loss of th> lucrative import business carried on by a few large for- eign firms with the government and semi-government enterprises of the former regime was inevitable. That market may be considered as perma- | nently eliminated, barring a return to power of the young marshal. Chaotic Conditions Cited. ‘The chaotic conditions which have | prevailed throughout the greater part of Manchukuo on account of the rav- ages of banditry and the military ac- | tivitles of Chinese volunteers and anti- | Manchukuo troops have greatly cur-| tailed the agricultural producticn of | the country and, in consequence, re- uced the buying power of the indi- | dual. This reduced buying power is' HAS THE . /' STRENGTHOF /" GIBRALTAR THE EVENING clearly reflected in the decrease in the consumption of kerosene, which is one of the stable imports. Consumption of this commodity, I am reliably in- formed, is 50 per cent below the figure for a normal year. consumption of gasoline for the year has likewise been greatly reduced. Two circumstances have contributed toward diverting Manchukuo govern- ment purchases to Japanese firms; first, the presence of Japanese cfficials and advisers in various government de- partments, and second, the deprecia- tion in the exchange value of the yen, which has made it possible for Japa- nese firms to underquote other foreign firms on competitive business. Since the slump in the yen, kerosene frcm Japan been flooding the South Manchurian market at prices considerably below those of competing American and British firms. This con- dition, however, is regarded as only temporary and will adjust itself when Japanese ofl companies replenish their present stocks at prices adjusted to| the present exchange value of the yen. Americans Lose Markets. One large market which, at least temporarily, has been lost to American importers "is the trade in electrical equipment. Japanese enterprise now enjoys a virtual monopoly for supply- ing electrical power throughecut the region traversed by the South Man- churia Rallway system. The American importing firm of An- derson & Meyer some years ago sold and installed the electrical equipment for the Chinese municipal electric light plant at Antung. The equipment was sold on credit. Following the Septem- ber incident, the Chinese pland at An- tung was closed by the Japanese mili- tary on the grounds that there was not enough business in the city to justity two plants. The Japanese plant, owned by the South Manchurian Elec Co., a subsidiary of the South Man- churia Railway, now supplies the elec- trical output for the city. Anderson & Meyer, through the American consu- late, has lodged a claim of $100,000 gold for damages. The claim, after having been under negotiation for more than a year, appears likely to be settled soon. The main obstacle jn the way of & settlement has not been Japanese re- fusal to recognize the American claim, but inability of the officials of the Chinese plant and the officials of the Scuth Manchurian Electric Co. to agree on the plant valuation. Although Anderson & Meyer will in all Jikelihood be compensated for their immediate loss, they will have lost & valuable future customer. ‘The Manchukuo government has just announced settlement of claims repre- senting money due to both domestic and foreign creditors for goods sold on credit to the old Manchurian regime prior to the September incident of 1931. These creditors include Japan, Great Britain, the United States, German; France, Austria, Norway, the Nether. lands, Czechoslovakia and Sweden. The claims aggregate 12,000,000 yuan in Manchukuo currency, or nearly $3,- 000,000 gold, and represent some 1,1 odd cases. The American claims, which do not include the case of An- derson & Meyer at Antung, total about $15,000 gold. Claims In Two Categories. ‘The claims have been placed in two categories. Those for contracts con- cluded since 1930 and wherein goods were duly delivered will be seitled on the following basis: Thirty-five per cent will be paid in cash during the fiscal year, July 1, 1932, to June 30, 1933. Twenty per cent will be paid in cash during the following fiscal year and the balance in 3 per cent bonds Tedeemable in 20 years, the face value of the bonds to be equivalent to the sum to be paid. In the second category are contracts agreed upon prior to and including The commercial | case has been individually investigated. STAR, WASHINGTON, 1929 as well as those wherein goods were not delivered but had been or- dered and shipped. For this class of cases, payment of contracts or dam- Practically all of the American claims fall in the first category. ‘There has been discussion in Japan of a Japan-Manchukuo economic bloc whereby Manchukuo would remain ex- clusively an agricultural or raw ma- terial country, while Japan would be industrialized, importing cheap raw materials from Manchukuo and re-exporting them to that country as finished products. To further this end, Manchukuo would grant prefer- ential tariff schedules to Japan. ‘This proposal was argued in Novem- ber in Tokio at a conference called by Mr. Nagai, the Japanese minister of overseas affairs. 'The prevailing opin- ion at this conference seemed to be that Manchukuo should be allowed to work out her own economic destiny. Dr. Yamamoto, a professor at Kioto Imperial University, expressed himself as opposed to the economic bloc in principle. “Manchukuo,” he declared, “is an independent state, and it is only proper that she should:be al- lowed to develop such industries as glve promise of their future. It is wrong to urge an economic bloc merely on the basis of Japan's own' conven- ience. In short, the industrial policy of Japan and Manchukuo ought to determined with a view to furthering the interests of the majority of their Ppeoples.” The Manchukuo tariffs have not been altered thus far and, according to the D. €, MCNDAY, J unbiased testimony of foreign business men of different nationality, the cus- toms is being administered with strict impartiality. In fact a number of Japanese importers have been com- ing that the customs duties are ing applied with unusual severity. tract ‘This comment, coming as it does from the Japanese, would indicate that Jap- anese merchants are obtaining no favors from Manchukuo so far as the customs is concerned. Even Japanese Must Pay. mhwmpufi:: gma; duties are now ap] China proper as well as other forelgn countries. This development has deprived the Japanese cotton mill owners in Shanghai and other parts of China proper of the advantage which they previously en- Joyed over manufacturers in Japan in the export market in Manchuria. The Japanese manufacturers in China have complained bitterly over payment of tariff on foods exported to Manchukuo, particularly since under existing con- ditions they are forced to pay double duties. The Chinese government col- lects Manchurian import duties at the port of shipment in lieu of the revenue formerly obtained from the Dairen customs before their seizure by Man- chukuo, When the goods enter Man- chukuo, they must pay duty to the gov- ernment of the new state of Manchuria. Although I have d complaints be | from some business men that the pres- ence of Japanese advisers and officlals in the Manchukuo government has resulted in discrimination against non- Japanese foreign firms on government orders, others have shown me indis AN UARY 30, 1933. of government eon- let on the basis of strictly com- petitive bids. I personally investigated one Manchukuo contract on_ which there were more than a dozen bidders, including two Japanese firms. The con- ‘was awarded to an American firm, which Eroved to be the lowest bidder. Chi Ohashi, Manchukuo vice minister of foreign affairs and former- ly Japanese consul general at Harbin, informed me that he is opposed to the enactment of a Manchukuo teriff which would grant Japan preferential duties. “Manchukuo is an independent state,” he declared, “and not a colony of .:mm It must treat all foreign nations 0. Japanese Embassy authorities and Manchukuo officials are now drafting & commercial treaty between Japan and Manchukuo. Its provisions are be- ing eagerly awaited by the business representatives of other foreign nations as it will be a concrete indication of whether or not Manchukuo intends to pursue the policy of the “open door.” e i e WOMAN DRY HEAD ASKS SENATORS FOR HEARING | Mrs. Henry W. Peabody of En-| forcement Group Charges Beer Bill Foes Have Been Ignoréd. Mrs. Henry W. Peabody, chairman of the Woman's National Committee for Law Enforcement, in an open letter to CONTROLLED members of the Senate Finance Com- mitteee, has asked an opportunity to testify on the Colller-Blaine beer and wine bill, charging the Judiciary Com- mittee had “ignored” testimony of wit- nesses opposed to the bill. ‘The report of the committee, Mrs. said, recognized only the testi- mony -of Prof. Yandell Henderson of ‘Yale University, who, she said, appeared in behalf of the brewers, and a state- ment by the “British Beer Commission.” A1 Relief for 01d War Horssh: Old war horses toiling arduously gypey day in Egypt elicited the sympsthy of the public when their plight hecame known. Many of them had beep sent to Egypt immediately after the World ‘War and now some are 20 years old, A subscription is being taken up to buy them of their masters and make their declining days pleasant. 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