693.002/623: Telegram
The Ambassador in Japan (Grew) to the Secretary of State
[Received May 1—7:10 a.m.]
287. Department’s 289, April 29, 8 p.m., via Shanghai, Chinese Maritime Customs. The Department’s interpretation of the fifth document transmitted with our 267, April 23, 8 p.m. is correct. According to Craigie, the Japanese Government by the arrangement under reference will contribute to the servicing of Chinese loans and indemnity payments 2 million yuan per month; the Japanese Government could not be expected to provide the foreign exchange necessary to cover the remittances and the Chinese Government must therefore furnish the foreign exchange for the Japanese contribution of 2 million yuan if the Chinese loan service and indemnity payments are to be maintained. Furthermore, according to Craigie, if the Chinese Government should refuse to provide the foreign exchange the arrangement must collapse. Craigie further states that once the arrangement becomes effective he believes that the Japanese might be prevailed upon to collect in foreign currencies 1 million yuan of the 2 million customs revenues necessary for loan and indemnity payments, which would lighten the burden on the Chinese National Government to the extent of 1 million yuan. Craigie expresses the opinion, however, that the Chinese Government will not be greatly burdened in providing the foreign exchange necessary to convert the 2 million yuan turned over monthly.
[Page 690]Craigie reiterated to me that he believes the arrangement will fall through unless we express no objection. He suggested as a possible formula that he orally assure the Japanese Government that we have no objection to the arrangement upon oral assurances from us to that effect.
Our only comment concerning the proposed furnishing of adequate foreign exchange by the Chinese Government is that this would appear to be a purely “pious hope” on the part of the British Ambassador but we have no knowledge that the Chinese Government has been consulted in the premises.
Repeated to Shanghai for Hankow.