693.002/416: Telegram
The Consul General at Shanghai (Gauss) to the Secretary of State
[Received 5:05 p.m.]
1120. Referring to my telegram No. 1069, December 2, 7 p.m. concerning Shanghai Customs. At a meeting with Hall-Patch, British Financial Adviser, on evening December 7, the Japanese Consul General stated that his Government would not permit any intervention by foreign powers in his discussion with the Commissioner of Customs but due consideration would be given to their interests and he would carry on informal conversations to ascertain their desiderata while continuing negotiations with the Commissioner.
- 2.
- He argued that deposit of revenue in Yokohama Specie Bank would not affect rights of any third parties and stated he proposed to conclude the negotiations with the Commissioner and then to discuss how the rights of third powers could best be secured.
- 3.
- Hall-Patch contended that this failed to give consideration to the interests of third powers and put them again in the same unacceptable position as at Tientsin. He stated that all customs revenue except that from Tientsin District is now deposited in Hong Kong and Shanghai Bank and arrangements could be made for that bank to hold in a suspense account the surplus if any from ports no longer under Chinese control, or the same objective could be reached by some modification of the proposal for an international bankers commission made at Tokyo by the British Ambassador.
- 4.
- Japanese expressed surprise that all customs revenue is now deposited in Hong Kong and Shanghai Bank and said Japan was not a party to the arrangements and should have been consulted. Japanese Consul General could not agree to any bank except Yokohama Specie Bank without reference to Tokyo. He would reconsider question and discuss it with Hall-Patch again in a few days. The latter urged that meanwhile the Commissioner of Customs be not pressed but the Japanese Consul General could not agree and commented that the Commissioner appeared now to be more uncompromising than heretofore.
- 5.
- I saw Japanese Consul General briefly yesterday and asked him to fix an appointment to continue our discussion. He asked for postponement for a few days.
- 6.
- I am of the opinion that we shall have to yield on the question of a Japanese bank so far as concerns the Shanghai revenues. Japanese Counsul General admitted to me at my previous discussion that it is a matter of face. Before agreeing, however, we should have adequate assurances, preferably at Tokyo or at least with confirmation at Tokyo, for the prompt release of foreign loan and indemnity quotas [Page 899] as well as customs expenses, and it would be desirable to have an assurance if possible that the surplus revenue if any will at least be earmarked for service of domestic loans. There should also be assurances of continuance of existing tariffs and procedure, continued control of personnel by Inspector General, and return to customs custody and use of harbor craft seized by naval and military authorities so as to permit proper functioning.
- 7.
- Frankly, it would be of considerable assistance in whatever discussions I must have if I could know the American desiderata.
- 8.
- I learn that Commissioner of Customs at Tientsin reports that withdrawals from Japanese bank there depend largely upon the arrangement finally reached at Shanghai.
Sent to the Department. Repeated to Tokyo.