793.94/10443
Memorandum by the Adviser on Political Affairs (Hornbeck)
| Conversation: | The Secretary of State, |
| The Chinese Ambassador, Dr. C. T. Wang. | |
| Present: | Mr. Hornbeck. |
The Secretary opened the conversation with an inquiry after the Ambassador’s family. The Ambassador replied that the members of his family were all well.
[Page 870]The question of war news was raised. The Ambassador stated that the Chinese were retreating “a little”—in the north; that the Chinese troops there were provincial troops, whereas the Japanese troops were their best; that the Chinese had better troops on a line behind their present front. The Secretary inquired how large an area the Japanese might try to occupy in the Shanghai theater. The Ambassador replied that he thought they would try to go to Nanking if possible.
The Ambassador then said that he had come to speak about the customs revenue. He said that the Japanese were trying to seize the customs at Tientsin and Chinwangtao. He said that a portion of the customs revenue was hypothecated for the service of foreign loans; that the Japanese were trying to seize the revenue; that the Inspector General had submitted a proposal to H. H. Kung; that he, the Ambassador, was not clear with regard to the details, but that he understood that the idea was that all revenue from the customs in the two places named should be held intact, that the loans should be serviced, and that the balance should be kept in a bank; that he understood that this had been endorsed by the foreign ambassadors; that the Japanese were insisting on holding the whole of the revenue. The Secretary said that he had not heard the latter part of this. He inquired whether Mr. Hornbeck knew of this. Mr. Hornbeck stated that it had been his understanding that the Japanese were proposing that the revenue be held in the Yokohama Specie Bank whereas the representatives of the other powers were suggesting some other bank, for instance, the Hong Kong and Shanghai Banking Corporation; but that he had not heard of the latest development which the Ambassador mentioned.
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