finally Japanese occupied China will be just as closed to our commerce as Korea or Formosa. B. Outside of the official offices which ordered railways, hydro-electric and water power plants, mine and arsenal equipment in Germany the Chinese private industry was our best customer. "Due to the Japanese action in the industrial field described above, the Chinese private industry is mainly ruined. German trade has been heavily damaged by the fact that many Chinese factory owners became unable to pay, so that they could not accept ordered goods and could not pay them and that for the future they have been eliminated as customers. Most of them will be forced to buy in Japan in the future if they want to continue working. “In a few cases where long termed business relations existed and where the German demands on Chinese undertakings were especially large, the German firms had constituted liens for themselves for security. Their number is not large because the Consul General in Shanghai watched carefully that such cessions were ‘bona fide’ and that they were commercially justified and not fictitious bargains. In the main it concerns the following cases: German Paint Trading Co. WAIBEL & CO. Five dye-works. They were established by Chinese who are close to DEFAG, in order to introduce new dying methods, and were technically taken care of by the DEFAG. The DEFAG had high claims on all of them. In