Office of the Historian

693.002/384: Telegram

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

Nanking, October 13, 1937—3 p.m.
[Received 7:35 p.m.]

804. My 788, October 9, 1 p.m. The British Chargé d’Affaires has informed me that the Minister for Foreign Affairs at midnight last night gave him the reply of the Chinese Government both to the Japanese demand in regard to the northern customs revenues and to the foreign bankers’ proposal regarding customs revenues throughout China. The Minister for Foreign Affairs said that he had had great difficulty obtaining the approval of the Chinese Government for this document of which the following is translation made by the British Embassy:

  • “1. The procedure now in force is that all customs revenues are deposited with the Central Bank of China. The Chinese Government is willing to instruct on its own initiative the Central Bank of China to authorize as a provisional measure a bank of a third country as custodian bank to receive such revenues. Details of the arrangement to be fixed by the two banks.
  • 2. The revenues referred to above shall include those of the Tientsin and Chinwangtao customs.
  • 3. The period for which the authentication [authorization] is given will only cover the duration of the present hostilities.
  • 4. The custodian bank shall be responsible to the Central Bank of China for the safe custody of all customs revenues so deposited. With regard, however, to the revenues collected by the Tientsin and Chinwangtao customs, the custodian bank is permitted to deposit them with another bank.
  • 5. The custodian bank shall, during the period of authorization mentioned in number 1 above, make the necessary monthly payments as heretofore. As regards, however, the revenues deposited temporarily with the other bank mentioned in number 4 it may draw (by check) on such other bank as they fall due the necessary amounts for the payment of the quotas of foreign loans assigned to Tientsin and Chinwangtao and tor the defraying of the necessary current local expenses of those stations.
  • 6. The custodian bank shall not concern itself with matters other than the arrangements above-mentioned”.

The Minister for Foreign Affairs said that this formula would be given to the Inspector General of Customs October 13 for transmission to the Commissioner at Tientsin with instructions to negotiate with the Japanese on that part which applies to customs at Tientsin and Chinwangtao.

It seems to us that if this scheme were accepted both the Japanese military authorities at Tientsin and the foreign bankers would achieve their principal objectives.

Sent to the Department. Repeated to Peiping and to Shanghai for repetition to Tokyo.

Johnson