Foreign Relations of the United States Diplomatic Papers, 1937, The Far East, Volume III

693.002/416: Telegram

The Secretary of State to the Ambassador in Japan (Grew)

Washington, December 12, 1937—3 p.m.

339. Reference Shanghai’s 1120, December 9, 3 p.m., particularly paragraph 6. The Department concurs in general with the opinion expressed by Gauss with regard to the desirability, in connection with any agreement reached for the temporary functioning of the Customs at Shanghai, of obtaining adequate assurances from the Japanese, the purpose of which would be the preservation of the administrative integrity of the Customs at Shanghai and the safeguarding of the customs revenues. We feel that it is important to seek assurance that there shall be prompt release of foreign loan and indemnity quotas as well as customs expenses, and believe that it would be desirable to obtain from the Japanese an additional assurance to the effect that the release of foreign and indemnity quotas shall not now or later be made contingent upon possible future developments, with the understanding that the Japanese will not support or countenance any subsequent arrangement which might render ineffectual such an assurance. We also agree that an effort should be made to obtain assurances with regard to the continuance of existing tariffs and procedure, continued control of personnel by Inspector General, and return to customs custody and use of harbor craft. Although we appreciate the reasons which would make desirable the earmarking of customs surpluses for the service of domestic loans, we question the advisability from a practical standpoint of endeavoring to obtain an undertaking to that effect from the Japanese, and feel that we should only ask for an assurance that the surpluses will be held in a suspense account.

You are authorized to consult with your British colleague and, when you ascertain that he is prepared to take substantially similar action, to inform the Japanese Government that, because of our very real concern that the integrity of the Chinese Customs Administration shall be maintained and the revenues therefrom safeguarded, we would welcome assurances along the lines set forth in the preceding paragraph.

Repeated to Shanghai.¹⁹

Hull

19. As No. 640, with instructions to assist in obtaining Japanese assurances “to the end that any settlement reached may accord with our broad position with regard to the customs question.” The Department on December 21 requested repetition of No. 640 to the Ambassador in China at Hankow.