693.002/484: Telegram
The Consul General at Shanghai (Gauss) to the Secretary of State
[Received February 3—7:50 p.m.]
197. Japanese Consul General recently urged the Inspector General of Customs to instruct the Shanghai Commissioner to deposit the Shanghai revenues in the Yokohama Specie Bank. Inspector General [Page 645] replied that the customs revenues are largely mortgaged for service of foreign obligations, that Japan is not the only power interested, that a group of powers oppose deposit of their shares in the Japanese Bank, that the Chinese Government also objects, and that it is impossible for him to conclude an arrangement with one power to which other powers object and the Japanese should therefore endeavor to obtain withdrawal of that objection.
2. Japanese Consul General inquired of me this morning whether the American Government object to deposit of revenue in the Japanese Bank. I answered that the natural reply to his question is to inquire what assurances the Japanese Government is prepared to give in response to the request of the American Government as made at Tokyo and repeated by me to him here. He admitted that he did not know the attitude of his Government on the American request, commented that some of the assurances would be difficult to give, but asserted that the Japanese are prepared to release foreign loan and indemnity quotas. In the long discussion which followed I suggested that it would seem a reasonable compromise to release the foreign loan and indemnity quotas in other than the Japanese Bank since he asserts that such quotas will be released, but I emphasized that from my point of view the question of the assurances we desire is much more important than the question of the nationality of the bank of deposit. I also directed attention to reports that the Japanese are not contributing to the customs revenues, their ships and merchants not paying tariffs and customs duties. He replied that he was anxious to get the matter of the Shanghai customs settled so that this situation could be corrected.
Repeated to Tokyo, Hankow, and Peiping.