693.002 Manchuria/290
The British Secretary of State for Foreign Affairs (Simon) to the Secretary of State, at Geneva
My Dear Mr. Stimson: When we spoke about Manchuria the other day, I promised to let you have my latest information as to the action of the Manchurian authorities in relation to the administrative integrity of China. [Page 739] There are two separate points to be mentioned, one as regards the customs and the other as regards the salt gabelle.
- (1)
- As regard the customs, I have refreshed my memory of our latest telegrams and find that I was correct in what I told you about the procedure which appears now to be contemplated for ensuring the continued contribution by Manchuria to the service of the Chinese loans secured on the customs. As I understand it, the suggestion is that the Commissioners of Customs at Manchurian ports will continue to pay revenue into the local bank in the usual way. The structure of the customs administration will remain unchanged. It so happens that the revenue collected at Dairen (in the Japanese leased territory) is approximately equal to what would be the appropriate quota for Manchuria to pay for the service of the foreign loans. The Dairen revenue will continue to be remitted by the bank to Shanghai, but at all other ports in Manchuria, the Manchurian authorities will issue orders to the bank concerned (which is in every case a Chinese bank) not to obey any instructions the Commissioner may give with regard to remitting the revenue to Shanghai, but to remit the whole revenue to Mukden (or Changchun). The Chinese Government, I understand, intend under this arrangement to permit the customs houses in Manchuria to continue to function as usual, and, as I have said, there will be no breach in the structure of Chinese customs. There would result a diversion of a portion of the revenue, but no breach in the integrity of the customs administration. In this arrangement we believe the Nanking Government are prepared to acquiesce, largely as a result of the representations made to them by the Chinese banks which have branches all over China including Manchuria and which are naturally anxious to see maintained the integrity both of the customs administration and of the Chinese State. If a separate Manchurian customs system should be set up, this would be a break in the unity of the customs administration which is the firmest foundation on which to re-build China financially and which may well prove in the long run a powerful instrument for drawing China and Manchuria together again. It is these considerations, as you know, which have made us doubt whether what is happening in connection with the disposal of the proceeds of the customs constituted a good ground for alleging a breach of administrative integrity.
- (2)
- Salt. On the other hand the news we have just received about the salt gabelle does indicate a very real threat to the integrity of its administration. Our information is as follows: The Manchurian authorities have appointed a Japanese, named O. Nakada, to take charge of the Manchurian salt gabelle. His first act appears to have been to close the district inspectorate at Newchwang and doubtless the other district inspectorates will be closed in due course. While the salt gabelle, for various reasons, is not so powerful a binding force [Page 740] as the customs administration, yet the disruption of the salt gabelle and the establishment of a separate distinct salt gabelle in Manchuria is undoubtedly just such a breach of the administrative integrity of China as was contemplated in Article 1 of the Nine Power Treaty.
Now if I understand you rightly, you are not anxious that any representations you may think fit to make should necessarily be based on the integrity of the customs. It appears to me that the action of the Manchurian authorities in regard to the salt gabelle offers a far better ground for such representations. I am as anxious as you are that our Governments should act together if we possibly can and such consideration as I have so far been able to give the matter inclines me personally to think that we might well make joint or similar representations to the Japanese Government, whether by identic notes or otherwise, to show that we are not prepared to remain silent while a solemn international obligation is being violated. If therefore, you will let me know that you agree, I shall be happy to look very carefully into the possibility of making some such representations when I get back to London.
Yours very sincerely,