693.002/470
Memorandum of Conversation, by the Secretary of State
The Chinese Ambassador called on his own request. He referred to my recent telephone message to him regarding the Chinese proposal [Page 55] that this Government take over their interests in Tokyo and the lack of occasion for our doing so now. He remarked that he had sent this information on to his Government and had since heard nothing to the contrary. I expressed the view that probably this settled the matter for an indefinite period, in which he acquiesced.
The Ambassador then stated that a rather serious development seems to be in prospect in connection with the understanding that the Japanese puppet government located at Peiping is undertaking to lower or abolish certain tariffs; that this would probably be chiefly or entirely for the benefit of Japan; that up until last year China had been meeting her debt service, both internal and external; that I, of course, would understand the large factor these Chinese customs receipts constitute, and that therefore such action will play havoc with their continued meeting of debt service. I first inquired as to which port or ports these customs reductions would probably be applied, and the Ambassador expressed the view that Tientsin would be at least the chief place of entry of goods. I then remarked that this Government for some time has made known its position of standing for the integrity of customs organization in China, as well as its reasons therefor; that naturally it has also expressed its frank view when any entry of goods for the Japanese Government or groups of Japanese individuals was being undertaken or so reported.
The Ambassador then said that he thought a declaration of war by Japan was less remote now than heretofore, and he would be interested to know what our policy would be in that event. I replied that that was a matter I would be obliged to discuss with him if and when such development actually took place; that I would not be in a position to do so earlier. He at least seemed to understand the situation.
The Ambassador then stated that there was a report to the effect the British and the Japanese have some sort of agreement whereby the Japanese are to deal gently with Canton and the British are to be less disposed to allow arms, ammunition, and implements of war to enter China through Hong Kong. He asked if I knew anything about this report, to which I replied in the negative.
He said the fighting was fairly brisk at this time.