The Minister in China ( MacMurray ) to the Secretary of State
[Received 9:25 p.m.]
114. My telegram number 104, February 1, 5 p.m.
1. Meeting of interested diplomatic representatives was held yesterday evening at which Aglen stated that when the collection of surtaxes by the Maritime Customs was first mooted 2 months ago he had conferred with officials of Ministry of Finance and Revenue Council and other interested financial authorities and had obtained their assent to his contentions that it would be actually impossible for the Customs to collect in opposition to dissent of any of the treaty powers such as Japan. Thereafter when visiting Hankow on service business he had been told by Eugene Ch’en14 that if Customs at any time anywhere in China undertook to collect surtaxes Nationalists would consider it “an act of war” and would do their utmost to “smash” Customs even though they realized its value to China and would otherwise be anxious to preserve it. Shortly afterwards while still in the South he had been notified by the same Peking authorities who had acknowledged its impossibility that he must have the Customs make the collections; and 2 days later, without opportunity for further consideration [Page 459] he was informed that he had been relieved of his functions as Inspector General for failure to carry out this order.
2. Aglen explained that effect of order was to impose upon the Customs duties which could not be fulfilled in opposition to the Japanese protest in any port except perhaps Dairen and the attempt to carry out which would result in immediate breaking up of the Customs in the ports under the Nationalist control. Any successor in [apparent omission] must confront the same dilemma that had led to his dismissal. He furthermore pointed out that the appointment of successor by the Peking authorities in itself raised an issue with the Nationalist authorities and would equally certainly lead to break-up of the Customs.
3. Upon the question being whether the diplomatic representatives were prepared to make representations in any form to the Peking authorities with a view to dissuading them from a course of action so injurious alike to foreign and to Chinese interests, the British, French and Italian Ministers and even more emphatically the Japanese Minister declared their readiness to cooperate in any practicable steps to that end. I reserved judgment for the time being. The other representatives declared themselves willing to cooperate at any rate in the event of unanimity being reached. A committee was designated to draw up the basis of such representations. I consulted with the committee today with a view to formulating a statement and a course of action with which I felt able under your instructions to cooperate in representations to the Chinese on a basis not of a right but of a common interest in averting a disaster to the interests of foreign trade and of Chinese financial arrangements. As a result of this conference Senior Minister is proposing to his colleagues that together with such of them as wish to accompany him he should shortly wait upon Dr. Koo15 and, in behalf of all the Ministers concerned, urge the inadvisability of persisting in a course of action which would prove ruinous. Primary emphasis would be laid upon the advisability of persuading Chang Tso-lin16 to find some way of avoiding the necessity of carrying out the order to the Customs to collect the surtaxes. Secondarily, it is hoped that means may be found to avoid immediate dismissal of Aglen in accordance with mandate, in order to force an issue with the South. In connection with this discussion with Koo it is proposed to hand him a memorandum in the following terms, which might in turn assist him in laying the matter before Chang:
“The diplomatic representatives of the Governments concerned, having taken note of the Presidential mandate of 31st January last, relieving [Page 460] Sir F. Aglen of his office of Inspector General of Customs, feel impelled to make the following statement:
Firstly, this removal from office arises from the fact that it is a physical impossibility for the Inspector General to carry out the order to levy upon foreign imports certain taxes which do not rest upon traders [treaty?] basis, and to which not all the Governments concerned have given their consent. The attempt to execute such an order would constitute a danger to the very existence and functioning of the Customs Administration, thus affecting the trade of all foreign countries and impairing the security of China’s contractual obligations.
This danger renders it vital alike in the interest of China and of the foreign nations that the above order be rescinded or recast, and the diplomatic representatives above mentioned find themselves obliged to urge that this be done.
Secondly, they wish to recall to mind the declaration made by the delegation to the Washington Conference ‘that the Chinese Government have no intention to effect any change which may disturb the present administration of the Chinese Maritime Customs’.
The sudden removal from office of the present Inspector General of Customs for failure to execute an order impossible of execution clearly involves such a disturbance as was guarded against by that declaration.
There is therefore no option but to hold the Chinese Government to their word and to urge that no such disturbances be created by the removal from office of a tried government servant for causes beyond his control.”
4. I was today visited by Chang, vice governor of the Bank of China, who gave me to understand that while Chinese banking interests are fearful of coming out into the open, they are contemplating exercising their influence as strongly as possible with a view to preventing catastrophe which they feel would be involved in the break-up of the Customs organization which in spite of factional jealousies has hitherto been able to maintain its status as the sole administrative institution which could function throughout China and in behalf of China as a whole and has remain[ed] the sole stable element in Chinese finance and in the foreign trade of the country. Such action on their part would likewise be directed to finding some means by which, without loss of face, Chang Tso-lin and his political subordinates in the Cabinet could nullify the effects of the order and of mandate.