793.94/2493: Telegram
The Consul at Geneva (Gilbert) to the Secretary of State
[Received November 5.]
279. Department’s [Consulate’s?] 276, November 4 [3?], 10 a.m. The following is the text of a communication dated November 4 from [Page 374] Sze to Drummond, together with its enclosure giving text of a cablegram received by the Chinese delegation from Nanking, dated November 3, concerning Japanese seizure of salt revenue in Manchuria:
“I beg to invite your attention to the attached information from Nanking, November 3, which unhappily more than bears out that serious view of the situation in Manchuria contained in the memorandum and covering note I handed you yesterday.
It is now clear that the Japanese army of occupation are pursuing a deliberate policy of trying to substitute for the authority of the Chinese Government the rule of various groups and individuals set up and maintained by the Japanese themselves.
Yesterday’s memorandum predicted that a further step in this policy was imminent. It has now been taken: the Japanese military are confiscating the salt revenues and trying to divert them into the hands of the puppet authorities set up by themselves.
The serious harm to foreign interests need not be emphasized. It is further clear that this policy is a flat defiance of the Council’s recommendations and a flagrant violation of the Covenant, the Pact of Paris, and the Washington Nine-Power Treaty. The situation is of the utmost gravity.”
The text of the cablegram from Nanking reads as follows:
“Please inform the Secretary General of the League for circulation to the members of the Council and the representative of the United States that the Minister of Finance has received the following report from Dr. Frederick A. Cleveland, Associate Chief Inspector of Salt Revenue:
[‘]The Japanese military authorities in Manchuria which have tied up the salt revenues since September 18th have now forcibly taken part of the accumulated revenues. The particulars are as follows: On September 19th the Japanese military authorities in Manchuria forcibly entered the district office at Newchwang since which time the Japanese military in occupation have exercised strict surveillance of all revenue transactions and revenue accounts in offices and collecting banks and have refused to permit remittances of funds to the National Government, asserting however they did not intend to expropriate funds or deprive the Government of its revenues.
Since September 18th large revenue funds have accumulated which are of two kinds: (1) duties paid in advance in free-trade areas of Mukden; (2) funds of the Government trading monopoly of Kirin and Heilungkiang Provinces called “Kihei”. About October 8th Kihei monopoly sent to the district inspectorate of Newchwang its check for $1,080,000 drawn on its depository bank but payment was interdicted. Ascertaining that check was fully covered by deposits the inspectorate continued to release salt required for distribution to Government monopoly on credit. Accumulated deposits of duty paid in advance at Newchwang amounted to $670,000 and at Changchun for Kihei account tol $2,600,000 on October 29th.
October 31st at 10 a.m. Mukden district inspectorate telegraphed to the inspectorate that the manager at the Newchwang branch, Bank of China, handed us on the 30th at 8 p.m. a letter stating that at 11 a.m. today paymaster Iwase of the Japanese military headquarters, adviser Tamada Shigeji of the Provincial Government Bank and Provincial Finance Bureau (newly created office) and staff officers of Provincial Government Bank with armed men came to his bank, demanded handing over salt revenue collections. This was refused but finally at 4 p.m. $672,709.56 was taken away. It was only after repeated negotiations that a Provincial Finance Bureau’s sealed receipt signed by Tamada was obtained. Under such circumstances we could do nothing.
[Page 375]Demands [for] Kihei deposit at Changchun, $2,600,000, are being made by persons claiming [to] represent certain groups, which have suddenly sprung [up], and monopoly since Japanese military occupation. Active agents of these groups, as in the case of expropriation of funds at Newchwang, seem to be so-called Japanese advisers. These representatives have threatened to use force in case said deposits at Changchun are not released to them.
Chief inspectors have instructed local representative[s] that in no case are they to yield to demands for funds subject to its control for two reasons: first, because such consent would constitute breach of trusteeship; second, because these large sums on deposit, if held under Japanese control or diverted to uses of persons who are unfriendly to recognized authorities, might be potent resource to stimulate opposition to Chinese National Government and foment revolution.
In addition to foregoing another form of exploitation is threatened, namely: diversion of revenues as they currently accrue. Average collections for the three North Eastern Provinces have been approximately $2,000,000 monthly. After deduction of expenses and quotas for service of foreign loans secured on salt, there is an average net balance of $1,600,000 monthly. Repeated demands have been made that this monthly surplus be turned over to persons and groups who have support and cooperation of Japanese military authorities in occupation.
Salt inspectorate has been instituted as agency for collecting and conserving salt revenues for foreign loan service and other uses and purposes designated by National Government. Against estimated total annual collections, $170,000,000, various appropriations and commitments have been made which, including expenses, service of foreign and domestic loans and authorized transfers to local authorities, amount to about $125,000,000 yearly—about 70 percent of estimated total salt revenue. In existing emergency chief inspectors deem it their duty to lay these important impairments of public revenue before you.[’]”
The texts of the above communication and telegram have been made public by the Secretariat.