793.94/4592: Telegram
The Consul General at Shanghai (Cunningham) to the Secretary of State
[Received March 5—10:36 a.m.]
156. 1. The retreat of the 19th Route Army places Shanghai in a comparatively undisturbed state. It is not anticipated that the peace of the Settlement will again be seriously threatened at this time. This condition makes it necessary to consider the future so far as the International Settlement is concerned. Two things are very important for the consideration of local and home authorities concerned.
2. First, Hongkew and Yangtzepoo must be as completely restored to the Shanghai municipal administration as the state of emergency will permit and that at the earliest possible moment. Under the protestation that their military activity was entirely for the defense of the International Settlement, Hongkew and Yangtzepoo have been under the exclusive control of the Japanese forces since January 28th. The public functions of the Shanghai municipal government have been thwarted and a reign of terror substituted therefor by the arbitrary [Page 507] action of Japanese military. The state of emergency was assumed by the Japanese to license them to take over complete municipal control of this district and to commit outrages that render life and property insecure for all but Japanese. This condition must cease and the district [be] restored to the Shanghai Municipal Council for administration with Japanese military merely to supplement the municipal police as defense agents on the perimeter of their sector so long as such state of emergency exists. The administration by the Shanghai Municipal Council must be exercised by those recognizing only the Shanghai Municipal Council. There are 1924 authenticated cases in which the Japanese interfered with the functioning of police authorities between January 28th and March 1st. There are innumerable cases which are based upon firm conviction of their existence but which have not at the present time been definitely authenticated.
3. Second, it is hoped that the powers concerned will give careful consideration to the future of the International Settlement and the safeguarding of the Settlement and all lives and property located therein or adjacent thereto. If it was not known before, recent events have convinced all careful observers that the land regulations have served their purpose and have become obsolete; the first special district court is received by Chinese officials as being an instrument to carry out party orders within the Settlement and therefore is not an independent court. The extra-Settlement and concomitant road questions are well known to the Department. The Court and the Municipality of Shanghai are constantly antagonistic, rendering the Settlement impotent in regard to forcible collection of taxes and the preservance of law and order. The want of cooperation of the Court and of Shanghai Municipal Council places us in a monstrous position. Had there been cooperation and had the boycott agitators, who destroyed or stole property, been regarded by the first District Court as possible criminals rather than Shanghai patriots, it is by no means unlikely that the severity of the present situation might have been minimized if not averted.
4. While the Sino-Japanese conflict continued I ventured to transmit to the Department by the pouch of February 23 a plan39 as a basis for discussion with the hope that its proposal by the United States Government might save Shanghai for all time as a place for valuable residence. This scheme has been reviewed critically by well-known Chinese businessmen and unless some unanticipated reason presents itself it is believed that it would receive the tacit support of the most important Chinese businessmen in Shanghai. It would not receive support from the politicians. The scheme proposes that a special area, [Page 508] including the International Settlement, French Concession and Greater Shanghai be created by a charter from China granting the residents 35 years’ administration under a governor appointed by The Hague. It is realized that a charter would not be favorably considered by China ordinarily but such proposal might be acceptable to all parties at some stage of the imminent negotiations. I trust the Department will consider my despatch in the sense that it has been presented and if it finds merit possibly it may be used at some stage. I really believe that it is the best scheme that I have seen and it is not in contravention of the Feetham report which at the time of its issuance did not seem to have any great practical value but under new developments it is possible that such report would be of great assistance.
Repeated to the Legation. Copy to the Minister.