693.002/584: Telegram
The Ambassador in China (Johnson) to the Secretary of State
[Received March 29—11:54 a.m.]
178. Shanghai’s 451, March 25, noon. I have not observed anything in the situation here which would lead me to expect that the proposed agreement regarding Chinese customs worked out between British Ambassador and Japanese Minister for Foreign Affairs will be accepted by Chinese Government. As was to have been expected, agreement makes no provision for maintenance of domestic loans, nor any provision made regarding surplus of funds after foreign quotas and administrative expenses of customs have been taken care of. My reaction to this proposal is that we should refrain from urging Chinese Government to accept this arrangement. I see no reason on the other hand why we should attempt to oppose it.
I do not perceive any basis for hope that the settlement of the customs question by this proposed agreement would prevent Chinese from further playing off the American, British and French Governments against Japan. It has not been apparent to me that the Chinese Government has endeavored to use this question for the purpose indicated. On the contrary, it has at times seemed to me that the Japanese may be disposed to use the situation for the purpose of persuading the British, French and American Governments to use their influence with the Chinese Government to accept situations beneficial to the [Page 676] Japanese and secondarily to the foreign powers but harmful to the Chinese.
Repeated to Peiping and Shanghai.