893.51/2402
The Minister in China (Reinsch) to the Secretary of State
[Received September 3.]
Sir: I have the honor to report that at a meeting on June 27th, the Diplomatic Corps agreed to make no objection to the release of an accumulated Customs surplus to the amount of Ts. 3,000,000. The Peking Government had previously made arrangements with the southern authorities for the latter to participate in the released funds to the extent of Ts. 500,000. On account of this agreement the opinion prevailed among the foreign representatives that there was no obstacle to the release. There was no ground to object on account of inadequacy of security.
The agreement of the Diplomatic Corps, however, was not perfect; much to the surprise of everybody, the Italian Minister insisted that he could not give his consent to the release unless the Chinese Government should pay the claim made by a certain Italian subject—Passeri. … Although the opinion was quite strongly expressed to the Italian Minister that it was neither in accordance with our rights in the matter nor with previous custom that such extraneous matters should be dragged in as a basis for action on Customs surplus, and that, in fact, our only function in this matter was to safeguard the loans secured on the Customs revenue beyond which we have no right to interfere with the Chinese use of their own money, nevertheless the Italian Minister remained obstinate having received instructions from his Government. The attitude of the Diplomatic Corps was notified to the Chinese Government who gave orders to the Inspector-General of Customs to pay over the surplus. This action clarifies the relations which the Diplomatic Corps has towards the release of the Customs Revenue and goes toward establishing the following principle: The Diplomatic Corps will not object to the release of any Customs revenue surplus whenever the payment of foreign loan charges on the Custom[s] Revenue is adequately provided for. The only exception would be a situation which existed last winter when the release of the Customs surplus threatened to cause radical action on the part of the southern authorities—a contingency which had to be taken into account in the determinations of the Diplomatic Corps. In other words, it is quite well established that an individual Minister cannot hold up the handing over of Customs funds on condition of having some special claim satisfied in which he is interested. It will be remembered by [Page 520] the Department that a previous attempt by the Italian Minister to hold up the release of salt funds for a similar reason was also not successful. Should such a practice have been established, no sound financial administration nor equitable adjustment of claims would have been possible.
There is herewith enclosed copy of an editorial from The Peking Leader of July 18th setting forth the importance of this precedent.12
I have [etc.]
- Not printed.↩