693.002 Manchuria/100: Telegram
The Minister in China (Johnson) to the Secretary of State
[Received June 23—2:35 p.m.]
701. Following telegram in English has been received today from the Ministry of Foreign Affairs. It was apparently also addressed to all other interested powers except Japan.
“I have the honor to invite the attention of the Government of the United States of America to the serious situation arising from seizures and threats gravely affecting the position and interest of the Chinese Maritime Customs in Manchuria.
For about 2 months the so-called Manchukuo authorities have detained in the customs banks at Harbin, Antung and Newchwang the entire customs revenues of those ports. These authorities now even threaten to interfere also with the Dairen customs which was established in pursuance of the Sino-Japanese agreement of 1907. The custom revenues of Dairen and the other Manchurian ports in the past 5 years have amounted to about 15 percent of the total customs revenues of China.
The National Government is of the belief that the Government of the United States of America is interested in this development for a number of reasons. Interference with customs revenues seriously disturbs the security of payments in respect of the indemnity of 1901 and also in respect of Chinese foreign and domestic bonds held by the nationals of the United States of America. It also jeopardizes the application of part of the customs revenues to payments in respect of China’s obligations in arrears and the increase of current payments for this purpose when economic and financial conditions so permit. Moreover a number of provisions of the Nine-Power Treaties of 1922 signed at Washington are involved. The treaty relating to the Chinese customs tariff65 stipulates ‘in all matters relating to customs duties there shall be effective equality of treatment and of opportunity for all the contracting powers’ and also recognizes ‘the principle of uniformity in the rates of customs duties levied at all land and maritime frontiers of China’. The Maritime Customs service is an impartial agency which if given unhampered exercise of its functions assures the effectiveness of these vital provisions. It is obvious that these provisions would be seriously compromised if the administration of the customs in any part of China were in the hands of officials responsible in effect to Japanese authorities rather than to the Inspector General [Page 103] of Customs. Indeed the principle of uniformity of duties has already been violated by the action of the Japanese authorities in refusing to allow a recent alteration of the sugar duty to come into effect at Dairen.
The treaty relating to principles and policies concerning China66 provides inter alia that the contracting powers shall respect the administration [administrative?] integrity of China. Clearly this provision also includes the full maintenance of the integrity of the Maritime Customs service in Manchuria.
That treaty likewise binds the contracting powers ‘to provide the fullest and most unembarrassed opportunity to China to develop and maintain for herself an effective and stable government’. It is obvious that such opportunity cannot exist if as the result of the action of one of the powers the National Government is deprived of revenues required to meet China’s solemn obligations and to support the essential services of the Government.
The continued loss of these revenues would be a very serious matter for the National Government particularly when for the first time since the establishment of the Republic the Government through supreme efforts and sacrifices has succeeded in balancing its budget without having recourse to borrowing. The total gross customs revenue has fallen off in the present difficult economic situation and for the first 5 months of 1932 is running at the rate of about $310,000,000 yearly for all of China (including Manchuria). More than $250,000,000 of this sum is required for support of the customs services and for payment of customs-secured obligations. The revenue from the Manchurian ports including Dairen amounts to over $35,000,000 yearly at the present rate. The serious effect of subtracting that amount from the free customs revenue is clearly apparent.
The persistence of the so-called Manchukuo authorities in seizing these revenues would thus deprive the National Government of essential revenues and throw upon the rest of China the entire burden of supporting the customs services and of the payment of customs-secured obligations. It could scarcely be suggested that such a situation would afford ‘the fullest and most unembarrassed opportunity to China to develop and maintain for herself an effective and stable government’.
The so-called Manchukuo authorities have professed their willingness, if they accomplish their plan to take over the customs administration in Manchuria, to remit a contribution for the payment of foreign but not domestic customs-secured obligations. They made a similar intimation when taking over the revenues and offices of the chief inspector of salt revenue. But in fact they have not remitted any salt loan funds since they took possession of the salt inspectorate in Manchuria in April and total arrears of quota payments and surtax due since March in respect of foreign loans amount to almost $1,000,000 to date. This action indicated that the service of the obligations secured on the customs and salt revenues cannot be assured if the arrangements for loan service as they existed prior to interference by the so-called Manchukuo authorities are disrupted.
I have the honor to request the Government of the United States of America to make appropriate representations of the Japanese Government [Page 104] in view of the critical situation and of the fact that the Government of the United States of America is party to the treaties having a bearing upon the matters described above.”