693.002/594: Telegram
The Consul General at Shanghai (Gauss) to the Secretary of State
[Received 4:52 p.m.]
508. Following from Tokyo:
233. “April 6, 7 p.m. Reference our 198, March 24, 8 p.m., Chinese customs. My British colleague has furnished me with the text of the revised summaries of the proposed customs arrangement which is the same as the text transmitted in our telegram under reference with the following exceptions. Paragraph 1. After the word ‘deposited’ insert ‘in the name of the Commissioner of Customs’.
Paragraph 3. Insert after the word ‘administration’ ‘(including the share of the expenses Inspectorate General) as certified by the Inspector General of Customs’.
Paragraph 4, sub-paragraph (b) substitute the word ‘amount’ for the word ‘proportion’.
[Page 677]Paragraph 4, sub-paragraph (d) to read: ‘All calculations in respect of quotas to be based on Chinese customs, gross import, export, and in-terport duty collections and to be determined on the above basis by the Customs Administration, with the agreement of Japan and the interested third powers’.
Paragraph 5, sub-paragraph (a) first sentence to read ‘A reserve fund in respect of the North China revenues to be created from the revenues now being held at Tientsin, the amount of the fund being equal to the foreign loan quotas for Tientsin and Chinwangtao determined according to sub-paragraph 4 (a)’ and thence the text as given.
Paragraph 5, sub-paragraph (b). Insert the word ‘Tientsin’ instead of the word ‘Shanghai’ at the end of the second sentence.
Paragraph 5, sub-paragraph (e). Delete the words ‘from the Inspector General’s accounts at the Hong Kong and Shanghai Bank and the Yokohama Specie Bank’ and insert the words ‘in the same manner’.
Paragraph 5, sub-paragraph (f). Delete the words ‘the branch of the Yokohama Specie Bank in each port and utilized for future loan quota payments’ and insert the words ‘the account of the Commissioner of Customs at the branch of the Yokohama Specie Bank in each port and utilized for future foreign loan quota payments’.
Craigie informs me that certain points are still outstanding, the most important of which is the choice to be made between the two alternative systems of which contributions of the various ports to the service of the foreign obligations shall be based. Namely, (1) quotas fixed for 6 months in advance on the basis of the receipts of the previous 6 months, together with reserve funds on which the Inspector General can call in order to make good any deficiencies and (2) a system of quotas revised monthly on the basis of collections for the preceding month but without any reserve funds. The draft text as revised is based on the assumption that the former alternative will be chosen.
The British Ambassador also furnished me with a draft copy of the Foreign Minister’s note which refers to the conversations which took place between the British Ambassador and the Vice Minister regarding the Chinese customs revenues and states that the Japanese Government after obtaining the concurrence of the proper Chinese authorities in the occupied areas are now desirous of dealing with the matter on the lines set forth by the proposal and are prepared to take measures described therein on the understanding that they are of a temporary nature and for duration of the present hostilities. The note concludes with the expression of hope that the arrangements will prove acceptable to the British Government.
Craigie’s draft reply acknowledges the receipt of the Foreign Minister’s note and states that the arrangements proposed in the documents enclosed therewith are acceptable to the British Government.
Craigie also furnished me with a draft letter addressed to him by the Vice Minister referring to the question of China’s domestic debt, the payment of duty on non-military imports at Shanghai, and the return of the customs craft seized by the Japanese forces. With respect to China’s domestic debt the draft letter states that while the question of China’s domestic debt lies outside the scope of any discussion [Page 678] relating to China’s foreign obligations it is believed that the Provisional Government will in its own interest give due consideration to this question. With regard to the payment of duty on non-military imports at Shanghai the draft letter states that it is unavoidable that the Chinese customs during active hostilities should have suffered some temporary dislocation in the ports immediately affected and that it is the intention of the Japanese Government that normal conditions should be restored and that payment of duty by [on?] all Japanese imports should be ensured at the earliest possible date; and that if not possible it is hoped that interested third powers will appreciate the importance of such emergency measures as reduction or exemption of tariff on a limited number of articles urgently needed and indispensable for the restoration of devastated war areas and for the relief of the general population. With respect to the return of the customs craft the draft letter points out that the customs service has already been permitted to use some of the vessels and that the Chinese authorities in the areas under Japanese orbits will gradually become interested in ensuring the collection of customs revenues and the Japanese will be ready to cooperate to this end and in such circumstances the Chinese customs service will be permitted to use all [its?] vessels excepting those especially required for military purposes and that even the latter will be progressively released as circumstances permit.
Please repeat to Hankow and to Department [as] No. 233, April 6, 7 p.m. Grew.”