893.512/467: Telegram
The Minister in China (MacMurray) to the Secretary of State
[Received 8:05 p.m.]
594. 1. I was informed last night by the British Chargé d’Affaires that his consul general at Hankow had learned that in the near future the Southern Nationalist authorities in control at Hankow intend to levy the same illegal taxes upon imports and exports as have been imposed at Canton (consult 419 from Legation, September 20, 5 p.m.87) and to make an offer that if the powers consent, the Maritime Customs collect these surtaxes. If assent is not given, they intend to establish as at Canton their own representative agency and apparently to use a boycott—although there was doubt left upon this point—directed against those nationalities which oppose the new surtaxes.
2. Such action by the Nationalists would bring us face to face with two obvious alternatives, the British Chargé explained. The first is to make our clearly futile and merely irritating protests again and then to permit matters to take a course in which not only would further promiscuous, unlimited exactions upon foreign trade be involved, but also a fatal blow given to the system of the Maritime Customs by the construction of a rival organization which would [Page 903] serve a particular party and be animated by such personal vested interests as soon would be acquired. The second is to compound with the Nationalists in the matter of their surtaxes by receiving them as being a fair equivalent to the Washington surtaxes, for which we have so far not found ourselves in a position to make arrangements, the only stipulation being that the Maritime Customs collect them. He considered that they may accept the latter alternative as averting the early destruction of the system of the Maritime Customs, the keystone of all orderly and normal relations with China as to commerce.
3. Even in view of your 286 of November 29th, 1 p.m.,88 I believed that I was warranted in conceding the preservation of the Customs to be a primary consideration of expediency. But I raised the question whether the second alternative course would prove to be a permanent and substantial protection against the Nationalists’ determined intention to sabotage the whole system. While I admitted the practically hopeless outlook of either horn of the dilemma, I tended to believe that the less hopeless course was to make an obvious formal insistence upon our rights rather than to acquiesce in the violation of our rights, because, despite our having shown that we did not actually mean the protests we made at Canton and at Hankow, the Nationalists still may believe that if we really were backed up to the wall, for instance at Shanghai, we might make our protests good. Acquiescence on the other hand would do even more than authorize all further encroachments in regard to Customs matters; it would give the Cantonese courage to presume also in other matters upon our weakness.
4. Furthermore I urged that a third alternative was possible, which, if time permitted, would be productive of better result than the dilemma of the first two. It is this: that the interested powers by some means put in operation the Washington surtaxes as a fulfillment of the treaty obligations we have, rather than as a yielding to the Cantonese exactions. However, even if all the foreign powers had all possible good will—and that we would be joined by Japan without infinite argument and enlargement of details there is every cause for doubt—action of any kind towards implementing the Treaty of Washington is scarcely possible in time to forestall the issue being forced by the Nationalists when once they present that issue. Unless we are prepared to undertake a last-ditch stand to prevent our being bullied into unconditionally surrendering vastly more than we took upon ourselves to give up under reasonable safeguards, the Washington Customs Treaty and the Special Conference would seem to be dead historical topics.
[Page 904]5. The British Chargé then expressed his opinion that the resolute determination of the British Government was not to repeat the mistake at Canton in lodging at Hankow a protest merely for purpose of record. Instead, they probably would take an independent course if necessary, concurrently acceding to these levies and attempting to make an arrangement whereby the Maritime Customs would be entrusted with their collection. I remarked my inability to indicate our position upon a new situation such as this and that I would have to refer it to you. Instructions from the Department are urgently requested.