693.116/72: Telegram

The Minister in China (Johnson) to the Secretary of State

673. Legation’s 665, August 9, 11 a.m.

1. Following from Canton:

“August 10, 3 p.m. Yesterday British Consul General and I called on the Inspector General for Foreign Affairs. He said he had received a mail instruction from Nanking, which called for a report on the oil situation, and a telegram stating that a protest had been received by the Foreign Office from the American and British Legations regarding this matter and instructing him to express to the local authorities the desire of the Foreign Office that the policies of Nanking and Canton should be in accord. He said he did not think the Central Government would take any definite action or decision until his report now under preparation, [Page 577] which would set forth Canton’s position, is received and studied. We gathered that no speedy local decision is to be anticipated as a deadlock has been reached between those members of the Political Council who wish to quibble over treaty interpretation by arguing that China has a sovereign right to ‘regulate’ kerosene business and those who maintained that ‘regulation’ cannot be carried to the point of rendering a treaty right nugatory.

We repeated our frequent suggestions that the restrictions be held in abeyance until decision could be reached and we went as far as we thought we could go in emphasizing the very unfavorable impression that was inevitably being created in our two countries by the apparent disposition to ignore our protests.

We asked the Inspector General whether he would consider advisability of requesting instruction from Nanking to suggest to the Southwest Political Council that the restrictions be held in abeyance pending decision on the question of treaty interpretation. We doubt whether he will do so and venture to suggest representations on that subject be made to the Chinese Government at Nanking by our own authorities.

There are evidences Marshal and the Chairman are favorably inclined on this matter but in view of the delicate political situation are desirous of conciliating Mayor and his group.”

2. Counselor at Nanking has been directed to take action suggested in penultimate paragraph provided he thinks it will help matters.