693.002 Manchuria/87: Telegram
The Minister in China (Johnson) to the Secretary of State
[Received June 21—10:40 a.m.]
683. Mr. T. V. Soong has issued the following statement concerning the customs crisis in Manchuria:
“In previous statements the Ministry of Finance drew public attention to the fact that the Japanese Government in the guise of the so-called Manchukuo authorities was deliberately interfering with the Customs Administration in Manchuria. Remittances to the Inspector General of Customs from Harbin, Newchwang and Antung have been forcibly stopped since March 28, April 16 and April 19, respectively.
Latest developments have made the situation even more critical. Reports from the Commissioners of Customs in Manchuria show that the puppet government [is] now in the process of appropriating the [Page 96] revenues detained in those ports and is extending its encroachment to Dairen by claiming the revenue of that port and instructing the Commissioner[s] of Customs and the depository banks—as the Bank of China and the Yokohama Specie Bank—to stop remittances to the Inspector General. The depository banks which are under the domination of the Japanese authorities have responded by refusing to make remittances since June 7.
This action is all the more grave and significant because the customs revenue collected at Dairen which so far has been intact forms more than half of the entire Manchurian collection because Dairen is Chinese territory leased to Japan; and because the customs is established there by an international agreement made between Chinese and Japanese in 1907. Few would take seriously the Japanese contention that the so-called Manchukuo authorities were acting independently of Japan when they interfered with the customs at Antung, Harbin and Newchwang. But at Dairen there cannot be even the shadow of an excuse for Japan to escape responsibility since that port is leased territory entirely under her control and interference with the customs constitutes a direct violation by Japan of a solemn international agreement.
The total customs revenue of the Manchurian ports comprises [on] the basis of the collections during the last 5 years and [sic] average 15 percent of the entire customs revenue. In 1931 the total Manchurian revenue was 26,078,000 Haikuan taels or 39,117,000 dollars.60
The flagrant breach of international agreements and undertakings by Japan and her puppets is of the gravest concern to the world. If it is allowed to go unchallenged it will establish a vicious precedent and will mean the beginning of the end of the Maritime Customs which has been the mainstay of Chinese credit at home and abroad. Not only are the principal domestic and foreign loans and indemnity secured on the customs but the Chinese Government has undertaken that the loans in arrears including many of the railway loans will be pledged on a portion of the customs surplus.
In addition the loss of the Manchurian customs revenue will throw the various obligations secured on the customs revenue entirely upon the other ports of China. In the present difficult economic situation the customs revenue averages about $310,000,000 annually for all China including Manchuria and of this sum more than $250,000,000 is required for payment of customs-secured obligations and for customs service charges. The appalling effect of a monetary loss of 49,000,000 [39,000,000] from the total revenues is a calamity impossible to face.
The seizure of revenue will also have as an inevitable consequence the replacement of the entire customs in Manchuria by a puppet installation; the region will be economically severed from the rest of China and to all intents and purposes will become a part of Japan just as in the case of Korea.
The existing unfavorable balance of trade against China will be dangerously accentuated since Manchuria is about the only important region in China that has an export surplus.
[Page 97]In a formal despatch from the so-called Manchukuo Minister of Finance dated June 9 to the Dairen Commissioner of Customs it is foreshadowed that he will take self-protective measures such as may render the maintenance of the integrity and the international status quo of the Customs Administration out of the question.
By unparalleled sacrifices the National Government for the first time since the establishment of the Republic has succeeded in keeping expenditures within the bounds of income. The seizure of the customs revenue along with the already accomplished seizure of the entire salt revenue in Manchuria including the foreign loans quota constitutes a set-back the gravity of which cannot be overestimated.
If the customs which has been the mainstay of China’s finances is broken up a financial catastrophe of the first magnitude will occur demoralizing the Chinese markets with consequent world-wide repressions [repercussions].
The friendly powers are interested in the integrity of the Maritime Customs which is the one prop against financial chaos; they are interested in the customs as security for their loans and loss [loans] in arrears; and they have solemnly guaranteed the territorial and administration [administrative] integrity of China. In a world already darkened by economic depression surely they cannot regard with indifference the callous destruction of solvency of 400,000,000 people.”
- Telegram dated June 23 from the Minister in China stated: “Legation’s 683 gave figures as published but apparently second figure should be 39,000,000 Mexican at rate of 1.50 Mexican to 1 Haikuan tael.” (693.002 Manchuria/97)↩