500.A4e/602: Telegram

The Minister in China ( MacMurray ) to the Secretary of State

Conference 43. 1. Although the technical experts representing all foreign powers reached definite agreement June 1st upon resolution respecting custodian banks to be attached to protocol implementing Washington surtaxes, the Japanese delegation at a meeting of delegates this morning refused to consider the report of experts until they had further instructions from their Government and advanced the opinion that the foreign delegations should make further immediate effort to reach an agreement upon questions considered heretofore, with a view to concluding a new treaty concerning larger projects, including consolidation of debts.

2. British delegates suggested that when Washington surtax protocol was agreed upon they would decide whether there was a Chinese Government to treat with, in which case the protocol should be submitted to the Chinese as a basis of negotiation accompanied by a note to the effect that the foreign powers assumed that the Chinese Government would make the necessary arrangements for giving effect to the agreement and that in event that opposition by any of the several provinces should make it impossible for the Chinese Government to give effect to said agreement, collection of surtaxes therein provided would be postponed until such opposition should be removed. There was informal general approval of this suggestion but the meeting adjourned without any definite action because of refusal of Japanese delegates to proceed until they heard from their Government, which they expect to do at any time.