E NO.
Washington: Embassy No. 7
Copied to: Tokyo, Unnumbered
Los Angeles, No.15
BRITISH CONSULATE GENERAL
SAN FRANCISCO, CALIFORNIA,
JANUARY 5, 1940.
.1'
With reference to my letter No. 114. of the
30th ultimo to Sir Owen Chalkley, I now have the honour
to enclose an article in regard to Japan-American trade
taken from the 1939-194-0 Year Book of the "Daily Com-
mercial News".
2.     As in the previous Instance, the article is
designed to demonstrate the importance of trade with
Japan to the United States in general and the Pacific
Coast in particular, and to bring about a state of
* / 1*
(f^cM U*A^; ^°,\      -lunlic ooinion which might influence the United States
P15 , ¦ xft J  Government in its attitude towards the renewal of the
discarded Treaty.     Furthermore, an attempt is mader
by reference to the alleged improvement in American trade
with Manchoukuo since the Manchurian Incident, to prove
that similar but far greater benefits may be anticipated
for this country when China is finally subjugated by
the Japanese Army and "peace" restored.     I can safely
say that the trend of American trade with Manchoukuo does
not really support this argument.     The decline between
1930 and 1936 was due, first to the depression, and
secondly to the chaos and anarchy which followed the
His Excellency,
The Right Honourable,
The Maro.uess of Lothian, P.C., C.H.,
His Majesty's Ambassador, JJ\ff^
Japanese/
Washington, D.C.
1
Japanese onslaught; and the increase in 1937 and 1938
was caused rather by abnormal importations of motor
trucks and other equipment for the Japanese Army rather
than by normal transactions.
3. There are, however, certain features about this
article, which is flanked on both sides by prominent
advertisements of Japanese firms, to which I would draw
Your Lordship's attention.     In the first place, the
opening paragraphs hear a marked similarity to the ex-
tract from the "Argonaut" which accompanied ray letter
under reference; and in the second, the present article
is referred to, at the end of paragraph 5, as a "booklet".
This rather gives the show away, and I have no doubt that
it did originally appear in pamphlet form, published by
the Japanese Committee for Trade and Information or one
of their numerous propagandists.
4. I am also informed that articles in favour of
the renewal of the Commercial Treaty are now appearing in
the San Francisco district papers, of v/hich about
eighteen, with aggregate weekly circulation of 126,000,
are published in the City and its vicinity, They-are
distributed gratis, and income is derived from advertise-
ments.     It may possess significance that the publishers
of these papers are H. F. Budde Publications Inc. Mr.
H. F. Budde, the proprietor of this concern, is a respected
and sober German resident, but the tone of the "California
Demokrat", the principal San Francisco German paper
(v/hich he also owns), convinces me that he is a faithful
disciple/
disciple of Dr. Goebbels.
5.     I think that this whole question is one of the
highest importance at the present time.     The trend of
events in the Far East will depend very largely upon the
attitude of the United States Government in regard to
future economic relations v.ith Japan-     The part of the
United States most vitally affected by those relations
is the Pacific Coast irhich is now being inundated vrith
propaganda and disingenuous argument designed to serve
Japanese interests.
I have the honour to be,
My Lord,
Your Lordship's most obedient,
humble Servant,
H. M. Consul-General.