893.102S/1227: Telegram

The Minister in China (Johnson) to the Secretary of State

969. My 961, August 16, 7 p.m.

The negotiations between the Municipal Council of the International Settlement of Shanghai and the Chinese authorities were instituted as the result of suggestions made by the British Minister and supported by myself to Wu Tieh-cheng, Mayor of Shanghai and Dr. Lo Wen-kan, Minister of Foreign Affairs.
The British Minister and I thought that the time was ripe to bring about a settlement of this long outstanding question and found the Chinese authorities agreeable to our suggestion.
It was our hope that the question could be settled locally and presented to the consular body and diplomatic body for information and not for approval.
Shanghai’s telegram of August 13, 10 a.m. indicates that the Japanese have taken the opportunity offered by circularization of the agreement to file with the Senior Consul objections to agreement. It is evident that they intend to use their opposition as a lever for forcing us into a round-table conference at Shanghai in the course of which they intend to ask for continued foreign municipal control in extra-Settlement areas and increased Japanese influence in the council and the police.
The British and American Consuls General at Shanghai have informed the Municipal Council of their approval of the agreement as it stands. I am informed that it is the intention of Municipal Council to lay the agreement before the ratepayers for their approval and I expect that this step will afford ample opportunity to those in and out of the Municipal Council “who are opposed” to prevent consumption [consummation] of this agreement which to my mind is so desirable.
British Chargé d’Affaires showed me yesterday an instruction from his Government in which his Government takes the view that if Japanese Government persists in stand which they appear to be taking at Shanghai, British Government will have to consider what [Page 638] it can do to prevent the interests of their nationals from being jeopardized by what can only be termed as wrecking tactics. British Government approves leaving matter for moment in the hands of our respective Consuls General and seeing how far Japanese are prepared to carry opposition.
Japanese attitude appears to me to give us three methods of dealing with the question: (a) Notify International Municipal Council and Chinese authorities of our consent to this agreement; (b) do nothing and accept stalemate; (c) consent to round-table conference.
The British and American Consuls General at Shanghai have informed the Municipal Council of our approval of the agreement. See Shanghai’s written despatch to the Legation, 7288 of August 13, which was copied to the Department, and Shanghai’s mail despatch to the Department 8431, August 5th.99
I do not favor method (b) for I believe we should notify both sides of our position in this matter.
In the end it is possible that we may be forced to assent to a round-table conference although I am confident that Chinese will oppose a conference limited to the discussion of Shanghai question; such a conference will at least afford us an opportunity to pursue our policy openly and free from influence by local Shanghai interests into whose hands the question appears now to have been delivered.
  1. Telegram in two sections.
  2. Neither printed.