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imported wines and spirits free of duty, "pro bono

publico" or for their own consumption!

6.

Japanese "government chartered vessels" or

"transports" are reported to have brought on several

occasions large consignments of rice, flour, beans,

groundnut oil and other foodstuffs, of which a

relatively small proportion has subsequently been

sold to dealers. The Japanese Consul-General however

informed me confidentially that the following system

obtains. Stores are ordered for military purposes

on a liberal basis. Those surplus to military re-

quirements are sold to an organisation known as the

"propaganda Comforts Distributing Association"

(

) Membership of this organisation

is confined to Japanese (and I think also friendly

Chinese) firms. No firm which is not a member of

this organisation and which does not undertake to

abide by its rules can trade. The organisation sells

the goods to its member firms at cost price, which,

since it includes neither freight nor duty, is very

low. The firms may only sell the goods to the public

at this cost price, plus 10%. All transactions have

to be recorded at the Japanese Consulate-General

which can inspect books and demand proofs. The 10%

profit is intended to defray overhead charges of

the member firm at Canton, and the difference if any,

between the 10% and the firms' overheads has to be

handed over "voluntarily" to the Peace Maintenance

Commission, as a "grant in aid". If the information

is true, it would be interesting to obtain a reliable

report on the working of the scheme, which seems

ingeniously designed to popularize Japanese goods,

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