228 REPORT ON COOPERATION IN AMERICAN EXPORT TRADE.
goods lies in the fact that not only are they of finer and more substantial
 texture, but they are also less heavily sized than Japanese,
which, when washed, lose a greater percentage of their weight than
do the American. Japanese goods have supplanted those of American
 manufacture for a number of reasons, contributing mainly to
cheapness, of which may be mentioned (1) the smaller cost of production;
 (2) the smaller cost of transportation from the mills, and
incidentally the advantages of direct and frequent shipments; (3)
the presence on the ground of Japanese firms with extensive facilities
 for the distribution of goods, enabling the Chinese dealers to
obtain supplies in quantities as small as they desire, while in buying
American goods through Shanghai importers it is necessary to contract
 for considerable quantities at a time, more than most native
dealers are able to handle; and (4) the difference in time required
for filling a contract, being spot or, at most, two or three weeks in
the case of Japanese, against two or three months required for
American. Japanese competition can be met only by producing a
cheaper grade of cloth and by adopting similar distributing methods.
As the Kobe-Dairen (steamer) route and the Kobe-Fusan-Antung
(rail) route are the shortest and cheapest channels for American
goods destined for the Manchurian markets, they should be availed
of by American manufacturers and exporters. By so doing American
 trade would share the facilities and secure the benefits of the
modern business machinery that Japan is providing for its own
commercial development in Manchuria. There need be no’ fear of
discrimination as such against American goods, which, I am satisfied,
 would receive the same treatment on the Japanese railways and
at the Chinese customs stations at Antung and Dairen as the goods
of Japan or any other nation. While the special arrangements described
 above are undoubtedly devised with a view to giving Japunese
 trade additional aids, yet, so far as their features are known,
they do not constitute a discrimination against American trade in
contravention of the principle of equality of opportunity in trade
in China. The disadvantage to American trade lies in the fact that
these facilities are rarely, if ever, availed of by any but Japanese
shippers.
The only international syndicate or combination engaged in business
 in Manchuria is the British-American Tobacco Co., a: British
corporation.
There are no combinations of buyers of American or other foreign
goods in Manchuria.
Japan controls the leading banking and transportation facilities
in South Manchuria and maintains its own postal, telegraph, and
telephone services. The Japanese gold yen is in general use throughout
 South Manchuria and is expected soon to become the sole circulating
 medium.
In the international competition for the trade of this region Japan
possesses the advantages of proximity to Manchuria, the residence
therein of a large and increasing number of subects, several large,
reliable firms, with extensive facilities for the distribution of goods,
and men with ability and experience to cope with the peculiar
local conditions. Japanese firms with branches located in many
towns throughout the interior do much of their business by what 1s