693.002/528: Telegram
The Ambassador in Japan (Grew) to the Secretary of State
[Received February 25—3 p.m.]
133. Our 123, February 23, noon,68 via Shanghai. Chinese customs. My British colleague has given me in confidence the substance of new telegraphic instructions from his Foreign Office dated February 24 paraphrased below which he will take up tomorrow with the Vice Minister for Foreign Affairs.
[Page 662]Without indicating that he has given me this document for any reason other than to keep me informed of developments he evidently hopes that these modified proposals may commend themselves to and possibly receive the support of our own Government. He tells me that the French Ambassador is prepared to make representations in support of these proposals but Craigie has asked him to abstain from doing so lest the impression be created that the American Government alone is out of sympathy with the British position which would inevitably weaken his own representations.
Paraphrase of British telegram.
With regard to the deposit of funds in return for sufficient safeguards it appears that the time has come for us to make a concession. We believe that if possible this concession should be restricted to depositing in the Yokohama Specie Bank the Japanese share in the loan services as well as the surplus after the foreign loan obligations have been met in full.
We would be prepared to consider an alternative only if this desideratum is impossible to secure. Such an alternative would provide that the complete revenues in the occupied areas be deposited in the Yokohama Specie Bank but that an undertaking be given that there shall be regularly transferred to the interested foreign banks the quotas accruing with respect to foreign obligations. This second alternative could however only be contemplated if formal assurances in writing were given you by the Japanese Government to the following purport: (End paraphrase).
- “(1) That the full services of foreign obligations will be maintained without interruption on due dates provided that revenue collections are sufficient but otherwise unconditionally.
- (2) That foreign obligations will be treated as a first charge on revenue after the cost of maintaining the customs administration.
- (3) That foreign loan quotas will be settled by agreement with all the powers concerned at weekly or monthly intervals as may be agreed and amounts so settled shall be transferred forthwith by the Yokohama Specie Bank to the banks nominated by the powers concerned or responsible for the service of the loan, i. e. in our case there would be paid to the Hong Kong and Shanghai bank the quota[s] in respect of the British Boxer indemnity and in respect of the loans serviced by the bank.
- (4) That any preventive launches, et cetera, still detained will be returned to the customs.
- (5) That customs authority shall be exercised in regard to all Japanese non-military imports.
- (6) In addition to the above it is highly desirable to have a uniform tariff for all China. An assurance that the Japanese authorities will arrange for this with the Inspector General of Customs on the 1931 basis or otherwise would help to relieve our anxiety regarding the integrity of the Customs Administration.”
(Paraphrase) Provided that you receive written assurances from the Japanese Government covering the first five points, and if possible, the sixth point, the financial adviser in Shanghai would then [Page 663] be authorized by us to waive further objection on the part of the British Government [to] a local discussion of the details. Of course no responsibility for the attitude of the Chinese Government or of the other interested parties would thereby be implied.
There must be a perfectly clear understanding that any arrangement on either of the foregoing bases would be only for the duration of the present hostilities and therefore of a temporary character. (End paraphrase.)
- Not printed.↩