893.512/472: Telegram
The Minister in China (MacMurray) to the Secretary of State
[Received December 17—3:50 p.m.]
621. 1. Immediately before receiving your 297 of December 13, 7 p.m., I was informed by O’Malley, British Chargé d’Affaires, that he had received information from the Japanese Minister that the Government [Page 915] of Japan was unwilling to accept the British suggestion that the assent of the powers be given to the levy of illegal taxes by the Southerners. When your instructions were received, I called upon the Japanese Minister. He confirmed the information that his instructions were opposed to the plan of the British, but his instruction, he pointed out, indicated opposition only casually to the modification I originally suggested by which the Washington surtaxes would be accepted by the powers unilaterally and unconditionally.
2. On December 15th the British Chargé and I made a strong effort to persuade our Japanese colleague that the proposed acceptance of the Washington surtaxes is, for Japanese interests as well as other foreign interests, the least harmful course of action among the various unsatisfactory courses available. He created the impression upon both of us that he agreed personally with our views but that categorical instructions, of which an informal abstract had been furnished to us in the meantime, bound him. The fact that his Government considers it to be essential that the surtaxes only be granted upon conditions which involve, quoting him, “pecuniary considerations”, was brought out in the discussion. These considerations, we understood, referred to funding unsecured debts and to establishing in the treaty now under negotiation between Japan and China, satisfactory rates upon Japanese imports. He said that the Japanese Foreign Office could scarcely look forward hopefully to securing the necessary approval of the Privy Council unless a satisfactory showing as to these considerations were made. He promised us that he would telegraph to his Government the arguments we urged upon him; namely, in effect, that if our treaty situation is to be saved, no bargaining is possible. However, he did not give us much hope of reconsideration.
3. I was convinced, as was O’Malley, that these are the objects which the Japanese have in view: (1) to postpone the imposition of the Washington surtaxes as long as possible, and (2) to keep their assent to such surtaxes in reserve as the price they will pay to secure a treaty which will establish upon Japanese products satisfactorily low rates. We considered it to be certain, therefore, that unless the Japanese Government is forced by the unanimous concurrence of the remaining powers interested in granting the surtaxes to come into the open, it will not reconsider its position. With this in view, the fact that the British Government is determined upon the policy of proceeding along this line was put forward to Yoshizawa very explicitly by O’Malley. The British Chargé stated that he would consult with all other interested colleagues to secure their concurrence; and that he would ask after waiting a reasonable time for instructions to be received that a meeting of representatives be held, and there he would call for a show of hands. With that done, O’Malley continued, [Page 916] his Government would consider that its duty to consult under the Washington treaties with the other parties to them had been fulfilled, and it would regard itself as free to undertake whatever course of action it then chose, singly or by cooperating with the other powers who might adopt a position the same as the British adopted. Since I did not believe my instructions warranted my going so far as to declare that I would, even in the face of Japanese dissent, join with the British, I for my part declared that in the eventuality contemplated by the British Chargé I would be obliged to secure further instructions from my Government, but that I inclined to the belief that in regard to the Washington surtaxes the United States would be anxious to fulfill its obligations as best it might under existing circumstances.
4. During the morning of the next day, the 16th, O’Malley and I went together to the Dutch Minister and then went to the Italian Minister. We found that they were prepared to give their Governments a strong recommendation of the proposal. O’Malley had already been informed by the Dutch Minister, who later also informed me, that he favored the plan enthusiastically and was seeking authorization that he might proceed with it. O’Malley also obtained a promise from our Belgian colleague similarly to make such a representation to the Belgian Government.
5. I received a call on the afternoon of the 16th from a representative of Chang Tso-lin. He represented courteously, but positively for all that, that funds were being obtained by the Southerners in disregard of the treaties; but that the Northerners frowned upon such acts violating treaties and they proposed to make an appeal to the powers asking to be placed in a practical position no less favorably, by being enabled through agreement of the powers to raise funds by means that were legitimate. He urged the taking of steps to put into force the surtaxes provided by the Washington Treaty. I inquired whether as a practical matter the Northern authorities would expect that they would receive the revenues collected from such surtaxes in ports under Nationalist control. His reply was that such diversion of funds to their enemies naturally would not be formally assented to, but as practical men they realized that this might be done. They would be content to have the revenues collected from the surtaxes in ports located within the territory they themselves controlled. He hinted unmistakably that in case the Northerners were not thus granted the surtaxes, the Northern military coalition will find itself, regardless of treaty obligations, obliged to act upon its own initiative, and that perhaps it might become more red than the Beds in the South.
6. After the above conversation I received a circular, dated December 15, from the Senior Minister. Enclosed in it was a memorandum [Page 917] which had been received from the Ministry of Foreign Affairs, regarding tariff revision at Shanghai at present. It stated that:93
“This Ministry has received a communication from Ho, the Japanese Minister, to the effect that he has been instructed by his Government that the newly revised tariff must be approved and made effective by the Special Customs Conference.
“The Chinese Government is of the opinion that in this way the newly revised tariff can become effective at an early date and that this is also in accordance with the resolution of the Washington Conference which speaks of the rates becoming effective as soon as possible. Therefore the Chinese Government of course fully approves the early reopening of the Customs Conference engagement.”
7. I received practically at the same moment the code room’s reading of section 2 of your 298, December 14, 8 p.m.94 I felt obliged then to call O’Malley in and say that I was precluded by your latest instruction from further cooperation with him along the lines we had been following, your desire being that unless all interested Governments agreed, the proposal we had been advocating jointly should not be put forward. Regret was expressed by the British Chargé that I was prevented by instructions from going along further with him, but he reminded me that the fact of my efforts in the matter being discontinued could not prevent his Government from proceeding upon its determination in the matter to bring it to an issue and have a public showing as to which of the powers are willing and not willing to have the Washington surtaxes implemented without conditions. The furtherance or the quashing of this proposal does not rest with us. The British Government is going on with it. We will have to elect within a few days whether to side with them, and it is probable, with all other powers participating in fulfilling our obligations under the Washington Treaty, under the terms which are the least disadvantageous possible in the circumstances now existing, or to side with the Japanese in obstructing such carrying out of our promises until considerations satisfactory to themselves have been obtained by the Japanese. To choose the latter would be humiliating for us as having been the authors of the Washington Conference and also would be disastrous in regard to the moral and material interests we have in China. In the light of this contingency I await your further instructions … [garbled groups]. Repeated to Tokyo by mail.