693.002/621: Telegram
The Ambassador in Japan (Grew) to the Secretary of State
[Received May 1—2 a.m.]
286. Our 286, April 29, 8 p.m., Chinese Maritime Customs. The: following letter and enclosure from my British colleague were received late last night:
“30th April 1938. Immediate. My Dear Grew, The Ministry for Foreign Affairs are anxious, for reasons connected with the Privy Council, not to publish the actual texts of the notes or their enclosure relating to the customs and we have accordingly prepared the accompanying draft of a communiqué, which, it is suggested, might be issued in the morning papers (here and in London) of the day following the conclusion of the arrangement. This text I have now submitted to my Government. The inclusion of the last sentence of paragraph 1 is of course dependent on your receiving the necessary authority to inform the Japanese Government that your Government do not propose to raise any objection to these arrangements. We have discovered today that we should have included amongst the ‘duties’ in paragraph 2 of the proposed arrangement a reference to the flood relief surtax in which the United States are interested. In order to avoid a last minute alteration of the text, it is proposed to inform you, after the agreement has been concluded, that both sides regard the service of this surtax as being covered by the arrangement.
Believe me, et cetera, R. L. Craigie.”
“Draft of statement to be issued by British and Japanese Governments on Chinese customs question (to be released on blank date and to be supplemented as required by each Government):
Unofficial conversations have been taking place since February last between the British Ambassador, Sir Robert Craigie, and the Vice Minister for Foreign Affairs, Mr. Kensuke Horinouchi, regarding the service of foreign obligations secured on the Chinese Maritime Customs revenue and other relevant matters. As a result of this exchange of views the Japanese Government have notified His Majesty’s Government in the United Kingdom of the temporary measures which they propose to take, during the period of hostilities, to regulate these matters and they have received in reply the assurance that the British Government will for their part offer no objection to the application of these measures for the period mentioned. It is further understood, that the Governments of the United States and France do not propose to raise any objection to the temporary application of these arrangements.
According to these arrangements, which will be subject to reconsideration in the event of a radical change occurring in economic conditions, all revenue collected by the customs at each port within the areas under Japanese occupation are to be deposited with the Yokohama Specie Bank. From the revenues thus deposited foreign loan quotas will be remitted to the Inspector General of Customs in order to meet in full the service of the foreign loans and indemnities secured [Page 689] on the customs revenue. The service of such foreign loans and indemnities will be treated as a first charge on the revenue, after deducting the maintenance expenses of the Customs Administration and certain customs payments and grants. Foreign loan quotas for each port will be determined monthly in proportion to the share of that port in the total gross collections for all ports during the preceding month.
Arrangements will also be made for the payment to the Japanese government of the arrears on the Japanese portion of the Boxer indemnity held at the Hong Kong and Shanghai Bank since last September, for the meeting of future payments in respect of the Japanese portion of the Boxer indemnity and the Japanese share of the Reorganization loan of 1913, for the repayment of the overdraft incurred by the Inspector General since January in relation to the Shanghai share of the foreign loan service which has been accumulating in the Hong Kong and Shanghai Bank at Shanghai, and for the transfer to the Yokohama Specie Bank of the balance of the customs accounts with the Hong Kong and Shanghai Bank in each port under Japanese occupation and its utilization for the future service of foreign obligations.”