500.A4e/600
The Ambassador in Great Britain (Houghton) to the Secretary of
State
London, May 28,
1926.
[Received June 5, 1926.]
No. 1045
Sir: I have the honor to refer to my telegram
No. 107, of May 25, 1 p.m.,71 relating to the Customs Conference now meeting at
Peking, and to transmit herewith a copy of the Note mentioned
therein.71
A memorandum, a copy of which is also enclosed, was handed today to a
member of the Embassy staff by Mr. Mounsey, of the Foreign Office, who
stated that Mr. Wellesley was at the moment out of town.
In referring to the question of debt consolidation, Mr. Mounsey
informally stated that His Majesty’s Government were in his opinion
prepared to consider favorably a proposition which they understood was
now being entertained by the Conference, namely, that up to one third of
the customs revenue be devoted to debt consolidation. It would seem
evident from the conversation however that the British are most anxious
that some action of the Conference should commend itself to the Chinese
public in order that there may be no increase in anti-foreign feeling
thereby increasing any existing resentment against Great Britain. To
this end it would seem that the British may insist that the Washington
surtaxes be granted before any adjournment, even temporary, of the
Conference takes place. Secondly, that a scheme of foreign control of
the customs revenue for debt consolidation will not be favorably
considered in view of the probable dissatisfaction this might create
among the Chinese over the alleged increase of foreign interference and
control thereby.
I have [etc.]
For the Ambassador:
F. A.
Sterling
Counselor of
Embassy[Enclosure]
The British Foreign
Office to the American
Embassy
Memorandum
His Majesty’s Government have received through the United States
Embassy in London a message from the United States Government72 enquiring whether His Majesty’s Government
endorse the attitude ascribed to the British Delegation at Peking of
desiring to abandon
[Page 756]
the
negotiations at Peking and break up the Tariff Conference; and
expressing the hope that His Majesty’s Government will continue to
cooperate with the other interested Powers in bringing to a
conclusion the task which was begun last October.
- 2.
- His Majesty’s Government desire to assure the United States
Government that the report received by them that the British
Delegation desire to withdraw from the negotiations at Peking
appears to be based on a complete misunderstanding. His
Majesty’s Government have no intention whatever of breaking up
the Tariff Conference. It is true that the question has been
considered whether at the present juncture it might not be
convenient to arrange a brief suspension of the conference over
the summer months. It was realized, however, that in existing
circumstances suspension of the conference might prove to be
more prolonged than was intended, and in order to prevent the
possibility of misunderstanding as to the sincerity of the
Powers, His Majesty’s Government considered it to be of the
greatest importance that before even such a brief suspension as
above contemplated took place, there must first be a complete
liquidation of the promises made at Washington.
- 3.
- The British Delegation in Peking fully shared this view, and
appreciated the prime necessity of liquidating the Washington
Treaty. A considerable interchange of views has, however, taken
place between the Foreign Office and the Delegation in regard to
the proceedings of the conference on the subject of the
unsecured debt; and it is probable that the misunderstanding to
which reference is made above has arisen in consequence of the
attitude which the Delegation has been instructed to take on
this matter, and which was formally stated by the chief British
Delegate at the meeting at the Netherlands Legation on the 6th
May.
- 4.
- The United States Government will no doubt recollect that His
Majesty’s Government were from the first averse to the
imposition on the Chinese Government of any scheme of
consolidation of the unsecured debt as part of the work of the
Tariff Conference, and that they only agreed later and with
great reluctance to the discussion of any such scheme at the
conference. If the schemes of the foreign Delegations for the
consolidation of the unsecured debt should postulate too strict
a control over China’s customs revenues (shortly to be increased
by tariff autonomy) His Majesty’s Government are afraid that a
dangerous deadlock may arise, for the discussions on this
subject show that the Chinese, though willing to bind themselves
to devote a proportion of their revenues to the unsecured debt,
have declined to allow the details of debt consolidation
[Page 757]
to be dealt with by
the Tariff Conference, and will refuse to submit to any
extension of foreign control—for that or any other purpose—over
China’s customs revenues.
- 5.
- His Majesty’s Government, after full consideration and
prolonged consultation with their Delegation in Peking, have
come to the conclusion that, while they are ready to agree to
any reasonable scheme for dealing with the unsecured debt put
forward by the Chinese and agreed to by the other Powers, it
would not be right to associate themselves with any attempt to
force upon the Chinese a greater degree of foreign control over
the revenues required for that purpose than they are prepared
voluntarily to concede. A policy involving increase of foreign
control, and capable of being regarded as an encroachment on
that sovereignty and independence of China which the Powers
agreed at Washington to respect, is so fundamentally opposed to
the traditional policy of the United States towards China that
His Majesty’s Government are disposed to believe that the State
Department will share their anxiety on this subject.
- 6.
- It is true that His Majesty’s Government originally desired to
exact proper guarantees from China in regard to the abolition of
likin as a condition precedent to the grant of the Washington
surtaxes, but they have come to the conclusion that, in the
altered circumstances and changed atmosphere of to-day, any
attempt to insist upon guarantees against the will of the
Chinese Government would only result in postponing indefinitely
the liquidation of the Washington promises. They are as anxious
as the United States Government fully to implement these
promises at the earliest possible moment, and believe that it
would be contrary to the intentions of both governments, both at
and subsequent to the Washington Conference, to subordinate the
fulfilment of these promises to the imposition upon China of a
scheme for the consolidation of her unsecured debt and extension
of foreign control over her customs revenues. Any failure to
implement the Washington Treaty might create a very dangerous
situation, and His Majesty’s Government, now, therefore, hold
the view that if any reasonably satisfactory assurances are
given by the Chinese Government as to the use which it proposes
to make of the new revenues the Powers should accept such
assurances, abstain from any attempt to impose control or exact
guarantees, and forthwith authorize the levy of the surtaxes.
They feel confident that a policy, so closely in accord with the
friendship and generosity always displayed by the United States
of America towards the people of China, will receive the full
and cordial support of the United States Government.
