611.9331/3–1249: Telegram
The Secretary of State to the Consul General at Peiping (Clubb)91
121. For Tientsin [as No.] 55. Dept exploring possibility use invoice certification as leverage obtain Commie permission access by ConGens to confidential radio communications. (Tientsin’s 123 Feb 24 and Shanghai’s 390 Feb 4 pouched Nanking 288). Envisage ConGen Tientsin and later Shanghai inform applicants [for] invoice certification that unable do so without continuous access [to] coded as well as plain language radio communications in order keep abreast current regulations and procedures and take up irregular cases Washington. If Treasury agrees, Customs would refuse entry Tientsin direct imports [Page 912] unless bond equal value goods put up subject cancellation if invoice certified at port of origin produced within 6 months. This approach would attempt make condition code communications appear procedural aspect performance normal consular function and avoid interpretation by Commies as US Govt adoption pressure tactics. Result presumably would be pressure by exporters on Commies who might be expected permit code communication in interest trade revival unless isolation ConGens is over-riding policy consideration.
British cooperation refuse Tientsin imports, particularly Hong Kong, necessary since not feasible Dept instruct ConGen Hong Kong refuse certify HK invoices on Tientsin exports re-exported via HK. Dept unaware any procedural device British could use to cooperate, but will explore matter with them if Treasury agrees.
Dept reluctant employ this device if Commies likely consider it resort econ warfare, or if in your opinion they not likely give way on communications, with possible result trade diverted via Dairen and north Korea and American [and] British business discouraged. If you have been certifying invoices, sudden refusal do so might have above repercussions. Have you certified any invoices since take-over? If so, in what volume and under what circumstances?
Request your evaluation reaction exporters and Commies this approach and its probable consequences, assuming British cooperation forthcoming. Obviously, device could for time being be circumvented by transshipment and re-export Shanghai since ConGen Shanghai could not now refuse certify invoices such exports, but device should be initiated now at Tientsin for sake consistency if it is to be employed at all. What is extent Commie desire resume foreign exchange exports? Are they likely stall until they can be sure exchange proceeds will be available Tientsin imports?
If you believe device could be applied successfully without undue risk, suggest you postpone certification invoices pending further instructions on grounds your uncertainty regarding present procedures and need for clarification from Washington. If you decide postpone certification, above explanation should be couched in terms your own decision since Dept wishes avoid any impression that US is considering restrictive economic measures regarding trade with Commie areas China. Thus, you could without embarrassment resume certification if negative decision reached here.
Reply soonest. Request comments Nanking, Shanghai, Peiping, Hong Kong and Taipei [for] Merchant.92