500.A4e/689: Telegram
The Minister in China (MacMurray) to the Secretary of State
Peking, November 27,
1926—1 p.m.
[Received 3 p.m.]
[Received 3 p.m.]
583. Department’s 279, November 24, 2 p.m.
- 1.
- Russo-Asiatic Bank is in process of liquidation, as reported in Legation’s despatch number 784, October 15th.30
- 2.
- Customs revenues are being deposited in accordance with the agreement of January 30th, 1912.31 The German and Russian banks having been eliminated, Hongkong and Shanghai Banking Corporation remains the sole custodian bank, receiving all deposits. It is reported that Chinese banks recently petitioned the Chinese delegation to the Customs Conference, asking that funds hitherto deposited in the Russo-Asiatic Bank be apportioned among Chinese banks. As yet no proposals to this effect have been received from the delegation or the Ministry of Foreign Affairs.
- 3.
- The whole question of the reallocation of customs deposits was examined in detail last summer by the technical advisers of the Special Conference who worked out a scheme whereby the revenues from the Washington surtaxes were to be allocated according to the terms of a special agreement of the Conference and revenues from existing tariff were to be allocated through revision of the 1912 agreement. The Conference being in abeyance no further progress has been made.
- 4.
- Although it is inequitable and unsound in principle that one bank should be sole custodian of the customs revenues, there are very practical difficulties and dangers in attempting to bring about a change at the present time. Revision of the 1912 agreement between the Chinese Government and the diplomatic body might well be considered tantamount to recognition of the present Peking regime. A proposal for revision would at once be met with a demand, on the part of the Chinese banks, for a large part of the revenues, at least all that portion above an amount necessary to meet foreign obligations secured on the customs; and under present conditions it would hardly seem advisable to precipitate a demand which will at the most not be long in forthcoming. Such a proposal would also involve demand for participation by foreign banks, not of the best standing, and of nationalities not having large interest in foreign obligations secured on the customs.
- 5.
- In view of these various considerations the Legation, while appreciating inequity of present arrangement, regards with some apprehension, any immediate move to alter the status quo.
MacMurray