393.115 Chase National Bank/2: Telegram
The Consul General at Shanghai (Gauss) to the Secretary of State
[Received October 24—8:40 a.m.]
1365. 1. American steamship President Coolidge of the Dollar Line arrived at Shanghai yesterday afternoon and after taking on a number of passengers and loading 2587 boxes of gold and silver bullion valued at approximately $3,500,000 United States currency was preparing to leave port early this morning. Late last night the master of the ship and this Consulate General were informed by the Customs that owing to a “misunderstanding” regarding the shipment of bullion the clearance of the vessel by the Customs must be postponed pending settlement of the question or as an alternative the ship might clear without bullion.
2. The bullion shipment was believed made by the Chase Bank, Shanghai to Chase National Bank of New York, San Francisco. The bank at Shanghai had applied at the Customs openly for permits to ship the bullion and they had been granted. The Customs also had issued the clearance for the ship and on the basis thereof it had been cleared at the Consulate General.
3. Upon investigation this morning I learn from the Commissioner of Customs that the permit for the export of the bullion had been granted at the Customs on the basis of a letter addressed to him by the Inspector General of Customs to the effect that this shipment was being made and that the Commissioner should authorize it on the application of the bank free of examination, equalization tax, export duty or other charges. Later, however, after the export and import permits had been granted by the Customs the Chinese Superintendent of Customs, an appointee of the so-called Reformed Government, had objected to the shipment as contrary to the orders of the Reformed Government and had required that the clearance of the vessel be suspended. In my conversation with the Customs Commissioner and his assistants the Japanese Administrative Commissioner described the situation as substantially that of force majeure and, being pressed by me, admitted that the action taken by the Superintendent of Customs had been at the instance of or with the support of the Japanese military authorities. I thereupon entered a strong oral protest with the Commissioner of Customs at the action of the Customs in suspending the clearance of the ship after it had been granted and after it had loaded its cargo openly under export permits duly issued by the Customs. I informed the Japanese Administrative Commissioner that I took a very serious view of this interference by the Japanese Armed Forces with an American vessel and its cargo which had been duly cleared by the Customs after the issuance of the export permits [Page 511] and that he might so inform the Japanese military or naval authorities at whose instance the action was apparently taken.
4. I then called on the Japanese Consul General and informed him of the matter, stating that I did so because I had learned that the action had been taken at the instance of the Japanese armed forces. The Japanese Consul General was thoroughly familiar with the case. He stated that the Chinese reformed government who are in control in this area gave an order to the Commissioner of Customs that without their permission no export of bullion should be permitted and when the Chinese Superintendent of Customs learned of the matter the Commissioner was instructed not to allow the shipment of the bullion. He stated that the position of the Japanese authorities in the matter is that they are in a position to prevent the taking of this gold and silver out of Shanghai. He told me that his predecessor had instructed the Commissioner of Customs not to authorize the shipment out of Shanghai of arms and munitions and gold and silver. The issuance of the export permits for the bullion by the Customs must therefore be regarded as a mistake. He [made?] the further point that some time ago the Chinese Government nationalized silver and that all silver thereupon became the possession of the Chinese Government. He expressed the view that the Japanese Government is not in a position to make representations to the American Government in this matter. I reminded the Japanese Consul General that it was reported at the time that Japanese banks had refused to acquiesce in any nationalization of the silver in their possession and added that according to the information given to me by the Chase Bank this silver or most of it had been in the vaults of that bank for several years. I told the Japanese Consul General that I must protest most emphatically the interference of his military, naval, Consul General, authorities with the clearance and despatch of the American ship concerned after that ship had loaded its cargo under export permits obtained regularly and openly from the Customs and after customs clearance had been duly issued and that I must reserve all American rights in connection with the issue and with the loss and damage sustained by American interests in consequence of the action of the Japanese authorities. I added that I was reporting the matter immediately to the Department and to the Ambassador at Tokyo as I felt that a most serious view must be taken of this Japanese interference with the Coolidge and its cargo loaded and cleared under customs permits in the normal way.
5. The steamer’s agents will probably proceed to unload the bullion in order that the ship may not be longer delayed. I told the agents that in view of the suspension of the clearance by the Customs I was not in a position [to] advise that the ship sail without a clearance.
[Page 512]6. The Chase Bank tells me that about half of the bullion has been in its vaults for several years as security for accommodations extended to the Chinese from time to time and that the Chase Bank has a definite and substantial interest in this silver. The bank admits that the balance of the bullion was received by them from other banks and added to the shipment. I was told by the bank about 2 weeks ago that it would make this bullion shipment and I then expressed serious doubt whether the Customs would or could permit it to be exported. When the Dollar Line manager consulted me in the matter some days ago before bringing in the President Coolidge I expressed the same doubt. I was therefore much surprised to learn that the export permits had actually been granted by the Customs. The Chase Bank inquired whether I could arrange for a marine guard during the transfer of the silver. I referred the bank to the commanding officer of the United States Marines and made no recommendation to that officer. Later the marine commander informed me that he had authorized the guard but had found upon investigation that only part of the silver was stored in the vaults of the Chase Bank, the remainder being in other foreign and Chinese banks and that he had been asked to provide guards to escort the bullion from the other banks as well as the Chase Bank. I expressed the emphatic opinion that if a guard were furnished by the marines it should not be used to escort silver from any other than American banks but that if the Chase Bank delivered the bullion to lighters on the waterfront as the property of that bank the marine guards on the lighters could not differentiate between bullion delivered from the vaults of one bank and that delivered from the vaults of another. I consider that the marine commander was correct in furnishing the marine guard on the lighters as had been done in the past in view of the disorderly conditions in the harbor and the possibility of interference with valuable cargo. There have been numerous piracies at the mouth of the Yangtze and valuable cargo on the river from Shanghai is exposed to possible depredations from the same disorderly elements.
Repeated to Tokyo and Peiping.