893.102S/1246: Telegram

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

359. Your 1202, October 19, 4 p.m.

As the Department views the situation the important factors are as follows:
The Chinese authorities appear to be in a conciliatory mood and to understand that opposition to the proposed agreement comes almost entirely from the Japanese;
The Japanese authorities appear to be in a more conciliatory mood than they were some weeks ago;
The proposed agreement has been, and should continue to be discussed strictly as, an agreement between the Municipal Council of the International Settlement and the Chinese authorities because, as such, there need be no reference of it to, or approval by, the interested powers;
There seems to be a consensus of opinion that this question, long a source of irritation at Shanghai, should be settled.
The Department feels, therefore, that every effort should be made, particularly by the American and British Consuls General at Shanghai, by informal discussions with the Japanese Consul General and with the representatives of the Municipal Council, to resolve the [Page 650] difficulties which still stand in the way of a successful conclusion of an agreement.
With regard to the first condition, (a), of your telegram, the American and British Consuls General at Shanghai apparently feel that some formula can be devised to resolve this difficulty. If the proposed agreement is kept strictly within the bounds of what it is supposed to be, namely, an agreement between the Municipal Council and the Chinese Municipality of Shanghai without reference to the powers concerned, the Department concurs in your view that there would seem to be no need for a declaration of the nature desired by the Japanese, because the contracting parties, having no control over the defense forces of the respective powers at Shanghai, are in no position to commit the powers with regard to these defense forces. It would seem, therefore, that a solution lies in a declaration by, or in an exchange of notes between, the negotiators of the agreement (not the representatives of the powers) to the effect that the provisions thereof are not intended by the signatory parties to limit or restrict in any way whatsoever (a) the arrangements which the foreign powers may have for the protection of their nationals at Shanghai and (b) the rights and privileges to which foreign nationals in China are entitled under the treaties. It is to be noted that the inclusion of (b) above may afford a solution for certain of the amendments desired by the Japanese.
With regard to the second condition, (b), of your telegram, it appears from your remarks that neither the American nor the British Consuls General at Shanghai feel that the Japanese will insist upon this condition. It is the Department’s opinion that this condition should be dropped, as insistence upon it would give the proposed agreement an international character which would be at variance with one of the fundamental factors referred to in paragraph 1 above, namely, that the proposed agreement is strictly local.
With regard to the third condition, (c), of your telegram, the Departments will not attempt, in view of its stand that the entire agreement is a matter for local negotiation, to enter into a discussion item by item of the amendments desired by the Japanese. In general, however, the Department is inclined to believe that, in the light of the fundamental factors outlined in paragraph 1 of this telegram, the difficulties raised by the proposed Japanese amendments are not insurmountable. By tactful suggestions, it ought to be possible for the interested Consuls General and the representatives of the Municipal Council to resolve the difficulties by persuading the Japanese to drop some of their demands and by finding satisfactory formulae for the other demands. The principal difficulty appears to arise out of the demand that the Chinese employ foreign, particularly Japanese, [Page 651] police, including a Deputy Commissioner of Police. Although the proposed agreement does not appear to provide for the employment of foreign police other than the Deputy Commissioner, some compromise solution may be found by providing in an exchange of notes, or in a declaration by the Chinese authorities, for the employment of some foreign police with an additional proviso that the foreign police in the northern extra-Settlement area where Japanese interests are largest shall be Japanese and that there shall be an additional Deputy Commissioner for that area who shall be Japanese. With regard to the employment by the Chinese of foreign police, the discussions leading up to the Sino-Japanese Shanghai agreement of May 5 of this year6 might offer a useful precedent.
These views are submitted as of possible assistance to you and to the Consul General at Shanghai. Both of you, in collaboration with your interested colleagues in so far as that may be possible, should continue your efforts to bring about the consummation of a strictly local agreement.