693.002/658: Telegram
The Consul General at Shanghai (Lockhart) to the Secretary of State
[Received May 19—7:30 a.m.]
680. Inspector General of Customs has received instructions from the Minister of Finance to transmit the balance of 25 million dollars local currency standing to the credit of the Shanghai Commissioner’s revenues accounts with the Hong Kong and Shanghai Bank to the Central Bank of China. The Inspector General has informed the British Ambassador that “as the Shanghai Commissioner’s balance in the Hong Kong and Shanghai Bank was satisfactory and been kept intact for the Chinese Government under the protection of the interested powers (notably Great Britain) it is incumbent upon me to take no action without ascertaining your attitude in this connection”.
[Page 712]The Inspector General is proposing to telegraph the Minister of Finance at Hankow that in view of the political situation here, more especially with reference to the Shanghai customs issue which he states is not yet settled, he suggests that question of transfer of the above funds to Central Bank be deferred for the time being “otherwise impasse may result”. He proposes to suggest that, since the balance in question has been accumulated, [and?] “has been held in safety under the protection of interested powers”, their views on the subject should be ascertained before coming to a definite decision on the matter of transferring the funds. I understand from officials of Central Bank here that the bank has granted sizeable overdrafts to the customs principally if not entirely to meet interest payments on internal loans for which the customs revenues are security. The 25,000,000 would probably go in part to meet such overdraft. The Minister of Finance has informed the Inspector General that the Central Bank will continue to permit the customs to draw from the Bank which will charge customs account as overdraft.
Repeated to Hankow, Peiping and Tokyo.