693.002/381: Telegram
The Ambassador in China (Johnson) to the Secretary of State
[Received October 9—10:12 a.m.]
788. My 767, October 6, 4 p.m.94 The Minister for Foreign Affairs yesterday afternoon asked the opinion of the British Chargé d’Affaires regarding the following proposal which he explained had just yesterday received the approval of the military authorities:
“Central Bank to nominate Hong Kong and Shanghai Bank or other ‘neutral’ bank as custodian bank for all customs revenues. Custodian bank to open an account with the Yokohama Specie Bank in which all customs revenues collected in Tientsin and Chinwangtao [Page 872] will be deposited, the custodian bank undertaking vis-à-vis the Yokohama Specie Bank that this account will be drawn upon by the custodian bank by check for foreign loan quota and current local expenses only, and the balance to remain at the Yokohama Specie Bank pending settlement of present hostilities”.
In spite of the asserted unofficial character of this proposal the British Chargé d’Affaires gained the impression that it would be approved by the Chinese Government if accepted by the Japanese Government and has submitted it to the British Foreign Office with the suggestion that it be urged on the Japanese Government by the British Embassy in Tokyo. He stated that the Minister for Foreign Affairs asked that his connection with the proposal should not be disclosed. He has also telegraphed it to the British Consul General in Tientsin with instructions that he attempt through the Japanese Consul General to obtain the approval of the Japanese military authorities there, or at least obtain a postponement of the transfer limit reportedly imposed by the Japanese authorities for the acceptance by the Chinese of the original Japanese [demand?] that the local customs revenues be deposited with a Japanese bank. This demand the Chargé d’Affaires feels (and I concur) the Chinese will never submit to in the form presented. I suggest that the American Ambassador in Tokyo be authorized to make representations parallel to those of the British Ambassador.
Sent to the Department, repeated to Peiping and to Shanghai for repetition to Tokyo.