693.94244/14: Telegram
The Ambassador in Japan (Grew) to the Secretary of State
[Received May 18—6:32 a.m.]
108. Embassy’s 104, May 13, 11 a.m. The Minister for Foreign Affairs through the Vice Minister this morning transmitted to the Embassy an unsigned and undated memorandum containing his views concerning the smuggling situation in North China. He said that the Foreign Office was now studying the situation and that no formal and definite statement could yet be made but that the following were his views at present. I find that this document quoted below is identical with one handed to the British Embassy and cabled textually to the British Government on May 4th in reply to the Ambassador’s approach of May 2nd.
“Smuggling in North China
1. I need scarcely say that the imputation of any political motive to the Japanese Government in connection with the question of smuggling in North China would be quite unfounded. The fact is that this smuggling is attributable partly to a purely economic cause and partly to that which concerns the internal administration of China. As things stand at present I believe that it is hardly possible for any foreign country to take any effective steps in order to prevent that smuggling.
2. Smuggling into China is not confined to North China but is likewise prevalent in South China. The fundamental causes of this traffic lie on the one hand in the Chinese system of unreasonably high tariffs and on the other hand in the fact that for certain reasons relating to the internal administration of China the local authorities are not sufficiently zealous to insure the collection of customs duties, the revenue from which goes in toto into the Treasury of the Central Government. As a matter of fact the local authorities of North China owing to the failure of the Nanking Government to defray the administrative expenses promised to them have apparently become disinclined to be [Page 158] earnest guardians of the customs revenue which is not available for their local purposes. A similar phenomenon has also been discernible in connection with the attitude hitherto assumed by the Canton Government.
3. It is not only other foreign merchants but also the legitimate traders of Japanese nationality who are suffering from the rampancy of smuggling. In fact, the Japanese traders and Chambers of Commerce and Industry in North China have made loud complaints regarding the losses sustained by the Japanese owing to the smuggling in question and have made earnest requests for the control of that illegal proceeding. Accordingly the Japanese Government have had under careful consideration means of controlling smuggling but since this practice is as I have already said ascribable to the high tariffs of China and to the lack of zeal of the local Chinese authorities in regard to the control of smuggling the Japanese Government are unable to find any appropriate measure to control the surreptitious traffic.
Such being the case I trust it will readily be understood that the Japanese Government could give no support whatever to the establishment of special customs tariffs by any local authority in China.
4. As regards the Chinese customs revenue for the service of foreign loans the Japanese Government are as much interested as the British Government and sincerely hope that the Chinese Government will give due consideration to the fundamental causes responsible for the prevalence of the above-mentioned smuggling.”
Repeated Peiping.