[Enclosure]
The British Secretary of State for Foreign
Affairs (Simon) to the American Ambassador (Mellon)
Dear Mr. Mellon: In our interview on the 30th May I
promised that I would send you a note containing my considered views
on the question of recent developments in the Manchurian Salt
Gabelle in relation to Japan’s obligations under the Nine Power
Treaty.
You will remember that on March 12th the United States Government
raised the question of the integrity of the Chinese Customs
Administration and proposed that we should join in filing objections
and reservations based on Article 2 of the Nine Power Treaty which
in their view would forbid the Japanese Government to institute or
instigate an independent Customs Administration in Manchuria. On the
[Page 109]
4th April Mr.
Atherton called
at the Foreign Office and was informed of the reasons why His
Majesty’s Government deprecated taking the action suggested. These
were briefly that Japan had not in fact instituted or instigated an
independent Customs Administration in Manchuria and that if
representations were made it seemed more logical that they should be
made on the ground that Japan had instigated the establishment of an
independent state of Manchuria.
When Mr. Stimson
discussed this question again with me at Geneva at the end of April
the position with regard to the Customs Administration remained
unchanged but telegrams had just been received to the effect that
the Salt Gabelle had in fact been disrupted and our information
appeared directly to incriminate the Japanese Advisers attached to
the Salt Transportation Office in Manchuria. I therefore suggested
to Mr. Stimson in
my letter to him of April 30th74 that the action of the
Manchurian authorities in regard to the Salt Gabelle might offer a
better ground for representations and I promised that I would look
very carefully into the possibility of making such representations
when I got back to London.
The foreign interest in the Chinese Salt Gabelle dates from 1913 when
the salt revenue w;as made the security for a large international
loan under an agreement which placed a definite responsibility for
the service of the loan on the foreign Associate Director General
and which gave to the group of lending banks the custody of and a
lien upon the whole salt revenue. In 1928, by the unilateral act of
the Chinese Government, this agreement was abrogated, the functions
and responsibilities of the group banks and of the Associate
Director General were terminated and a new system of Provincial loan
quotas were instituted. This led to a joint statement by the
interested Governments protesting against the action of the National
Government in varying by unilateral action the terms of
international agreements and placing full responsibility on that
Government for the liquidation of all loans secured on the salt
revenue whether the new scheme should be successful or not. Since
1928 therefore there has no longer been such a foreign interest as
would support a protest against interference with the Salt Gabelle.
Any representations that might be made would have to be based solely
on the ground that, as I stated in my letter to Mr. Stimson of April 30th,
the disruption of the Salt Gabelle constituted such a breach of the
administrative integrity of China as was contemplated in Article 1
of the Nine Power Treaty.
On consulting our Ambassador in Tokio and our Minister in Peking, I
found that they had both independently formed the opinion that it
would be unwise to raise the question of the Nine Power Treaty in
connection
[Page 110]
with a
subsidiary question such as the Salt Gabelle. They considered that
if any representations were made to Japan they should be in relation
to the whole structure which has been set up under her auspices in
Manchuria, but they doubted whether the present was the right moment
for taking action. I gather that substantially the same views are
held by the United States representative in Tokio.
In the face of these arguments, the force of which I recognise, I am
more and more impressed by the objections to which I now see my
earlier suggestion is open. I have come round to the view that if we
are to make representations regarding Japan’s obligations under the
Nine Power Treaty it is desirable that the other signatories to the
Treaty, particularly France and Italy, should be asked to join in
our démarche. I feel sure that they would
share the view that no advantage is to be gained by preliminary
nibblings at subsidiary points such as the Salt Gabelle, but that
the best course is at the proper moment to face the main issue from
which these lesser issues all proceed, namely, the setting up of an
independent state of Manchuria.
As for when, if at all, this should be done, a special difficulty
that confronts those States that are also members of the League of
Nations is that until the League’s commission has reported it would
be difficult to prejudge the issue. The Commission also includes an
American member and this difficulty, though it perhaps does not
affect your Government to the same extent, would seem to arise in
your case also.
To sum up, everything seems to point to the conclusion that the
wisest course would be to defer representations under the Nine Power
Treaty until the Lytton Commission has presented its report. The
report may contain material on which it would be wise to base
representations and it would in that case also provide an admirable
opportunity for coordinating the action of the League of Nations
with that of the United States of America. This would be an
impressive demonstration of the solidarity of world opinion and it
would I think be a pity to spoil the effect by taking half measures
before the time is ripe.
I hope that Mr. Stimson will feel able to share these views.
Believe me [etc.]
