693.002/502: Telegram
The Ambassador in Japan (Grew) to the Secretary of State
[Received February 11—11:25 a.m.]
99. Department’s 51, February 9, 8 p.m.—Chinese customs Shanghai.
- 1.
- We have no further information regarding decrease in Chinese customs revenues and the proposed decrease of quotas for indemnity and loan services.
- 2.
- With respect to the three points contained in the aide-mémoire of the British Embassy referred to in the Department’s telegram under acknowledgment, the British Ambassador states with regard to point 1 that he furnished this information based upon a published interview given Woodhead by General Matsui on January 28 at Shanghai.
- 3.
- With regard to point 2 the Ambassador stated that he based this
information on a report of a statement made by the Minister for
Foreign Affairs before a committee of the Diet which appeared in the
press of February 3 reading in translation as follows:
“Reverting to the Shanghai situation the Foreign Minister said in answer to other questions ‘negotiations on customs are now in a deadlock. The position of this country is that a close watch should be kept on customs revenue rather than actually taking over the whole revenue. What revenue is taken will be deposited with the Specie Bank. In answer to the question whether the Government has any plan of using Shanghai customs revenue for reconstruction of the city I can say only that there is at present a great decline in revenue, due to the military campaign. This causes me to believe that the customs revenue cannot be used at least to any satisfactory degrees in reconstructing Shanghai.’”
- 4.
- We noted the foregoing press report but did not think nor do we now think that it warranted the conclusion arrived at by the British Ambassador.
- 5.
- Regarding point 3 the British Ambassador in a conversation with Mr. Horinouchi on February 7 pointed out that Japan having temporarily taken over at certain Chinese ports the rights of the National Government in respect of the Chinese customs should in equity also assume the obligations of that Government and that so far as China’s obligations to foreign powers are concerned Japan has promised to respect all foreign rights and interests in China. On the foregoing basis Japan should recognize that the service of the foreign debt and indemnities constitute a first charge on the customs revenue apart from normal deductions for running expenses and that therefore Japan should recognize that the arrangements relating to the service of the foreign debt can only be modified by the Japanese Government with the assent of the powers which have acquired rights by virtue of past agreements. Craigie informs us that although Horinouchi was prepared to agree that Japan had assumed obligations in respect of customs quota of the Chinese Government he would not agree that Japan should previously discuss with other governments any proposed change in quota. Craigie states that he gathered from Horinouchi’s evasive reply that the Japanese authorities in Shanghai intended to use the customs revenues to service other administrations as well as the Customs Administration before the loans were serviced.
- 6.
- Craigie told me today that he considers the customs situation critical and hopes that I will be in a position to act in concert with himself and the French Ambassador as soon as possible. My French colleague is prepared to act as soon as my own instructions are received.
Repeated to Shanghai for Hankow.