The American Minister in China (Johnson) to the Brazilian Minister in China (Velloso) 46

My Dear Mr. Minister: With reference to our conversation of yesterday concerning the proposed agreement regarding extra-Settlement roads at Shanghai, I have pleasure in briefly outlining the present status of the case. As you are aware, this matter of extra-Settlement roads has long been an extremely vexed one and there had been much discussion of the matter by the Shanghai Municipal Council, the Consular Body at Shanghai, and the Chinese authorities when on September 29th last the newly appointed Japanese Consul General informed the Senior Consul that the proposed agreement regarding the extra-Settlement roads would be accepted by the Japanese Government provided certain revisions should be made. One of the chief of the revisions suggested by the Japanese was that the agreement should be referred to the Consular Body and the Diplomatic Body for prior approval, as Japan considered that the agreement would affect the treaty rights of the Powers.

At the time of this notification from the newly appointed Japanese Consul General the Chinese authorities appeared to be in a conciliatory mood in reference to the draft agreement which had been approved by the Shanghai Municipal Council and the Consular representatives of most of the interested Powers. The American Government is of the opinion that the proposed agreement should be discussed strictly as an agreement between the Municipal Council of the International Settlement and the Chinese authorities and that there need be no reference of the agreement to, or approval by, the interested Powers as it concerns questions arising outside the boundaries of the International Settlement affecting relations between the Municipal Council of the International Settlement and the authorities of Greater Shanghai.

The American Government, at the end of last October, informed me of its desire that every effort should be made, locally, by informal discussions with the Japanese Consul General and with the representative of the Municipal Council, to resolve the difficulties which [Page 612] still stood in the way of a successful conclusion of the agreement. Discussion of the matter continued at Shanghai and in January the Senior Consul reported there was reason to believe that negotiations for a satisfactory modus vivendi were progressing satisfactorily with promise of an eventual extra-Settlement road agreement which would be reasonably satisfactory to all parties concerned.

On December 30, 1932, the Secretary General of the Shanghai Municipal Council had transmitted his comments on the Japanese proposals to the Japanese Consul General and at the end of March, 1933, the Japanese Consul General replied with a memorandum which showed a far less conciliatory attitude on the part of the Japanese than had been anticipated by the Municipal Council and the interested Consuls. The Japanese inter alia insisted upon a definite statement regarding the employment of Japanese police officers and the approval of the modus vivendi by the Extra-territorial Powers, which conditions set forth in the Japanese memorandum were considered by the other interested parties as unacceptable and as appearing not to offer opportunity for further negotiation.

As the situation now stands it appears that the Shanghai Municipal Council has remaining but one course of action which may be briefly summarized as follows:

The Chairman of the Shanghai Municipal Council to sign the agreement on behalf of the Shanghai Municipal Council, and the Mayor of Shanghai to sign on behalf of the Municipality of Greater Shanghai. The ratepayers of the foreign settlements at Shanghai then to be called upon to ratify indirectly such agreement when the budget is passed at the next ratepayers’ meeting. Once the agreement is signed by the representatives of the Shanghai Municipal Council and the Municipality of Greater Shanghai, the Chairman of the Shanghai Municipal Council would forward a copy of the agreement to the Senior Consul for his information and the Senior Consul would in turn transmit a copy to the Senior Minister for the information of the Diplomatic Body.

From the latest advices received from the American Consul General at Shanghai I understand that this method of handling the matter is being discussed by the Senior Consul and the Secretary General of the Shanghai Municipal Council.

I am [etc.]

Nelson Trusler Johnson
  1. Copy transmitted to the Department by the Minister in China in his despatch No. 2068, April 22; received May 26.↩