693.002/385: Telegram
The Ambassador in Japan (Grew) to the Secretary of State
[Received October 14—9:34 a.m.]
473. Department’s 259, October 12, 4 p.m.
1. The British Embassy yesterday handed to the Foreign Office a memorandum entitled “Proposed arrangement concerning customs revenues at Tientsin and Chinwangtao”, which was based on a telegram received from the British Embassy at Nanking. As we have no information that the substance of the proposed arrangement, which was said to have originated with the Chinese Government, is known to the Department, we are telegraphing the text of the memorandum:
[Here follows text quoted in telegram No. 804, October 13, 3 p.m., from the Ambassador in China, supra.]
2. The memorandum makes no reference to the use of funds deposited with the Yokohama Specie Bank or to the depositing of funds in the Hong Kong [and] Shanghai Bank in the name of the Inspector General of Customs. The British Embassy informs us that, as the Japanese time limit (see Nanking’s number 788, October 9, 1 p.m.) was to expire today, it had considered it expedient nevertheless to present without delay the proposed arrangement to the Japanese Government and to urge acceptance thereof.
3. This morning we again stated orally to the Foreign Office that the American Government is interested primarily in preserving the integrity of the Chinese Customs. We stated that, as the arrangement proposed by the British Embassy appeared to contribute toward preserving the integrity of the Chinese Customs, we urged the Japanese Government to give it favorable consideration. However, we reserved [Page 875] the right later to comment on or to propose modification of the terms of the proposed arrangement.
4. Yoshizawa stated unofficially and not on behalf of the Foreign Office that the crux of the problem is the question of the disposal of surplus funds in the Yokohama Specie Bank. He stated that, because of abnormal conditions, the “Peace Preservation Committee”, which has assumed responsibility for the administration of the Tientsin area, cannot raise sufficient funds for its needs by local taxes, and that, as the incidence of the customs revenues falls largely upon the people of the Tientsin area, it was felt that the Committee is entitled to the use of the customs revenues for local administrative purposes.
5. He further stated unofficially that the arrangement proposed by the British Embassy was formulated by the Chinese Customs. He made the comment that if absence of any reference in the British Embassy’s memorandum to the question of the disposal of funds in the Yokohama Specie Bank meant that the Chinese Government is now agreeable to such funds being placed at the disposal of the “Peace Preservation Committee” it is likely that a satisfactory solution can be worked out between the Japanese Consul General and the Commissioner of Customs at Tientsin.
Repeated to Nanking.