The Secretary of State to the Minister in China (Johnson)
93. Reference your despatch No. 1776 of October 13, 1932,70 in regard to the Chinese Factory Law.
As the Department is in sympathy with the idea of cooperating with the Chinese authorities in regard to the question of factory inspection, it is in accord with the views of the Consul General at Shanghai that American factory owners concerned should offer no objection to the reasonable inspection of their factories situated outside of the International Settlement and the French Concession, provided that the Chinese authorities do not attempt to enforce the penal provisions of the Chinese Factory Law. If American factory owners are to be penalized for the manner in which they conduct or manage their factories, such action can only be taken by an American court in China in so far as there may exist adequate and applicable provisions in American law covering the charges which may be brought. While, therefore, approving the attitude of the Consul General with respect to the question of the inspection of American factories located in Chinese-controlled territory at Shanghai as set forth on pages 4 and 5 of his despatch 7330, September [Page 622]27, 1932, to the Legation,72 the Department does not believe that it would be wise to say anything to the Chinese authorities with regard to the penal provisions of the Factory Law other than to make it very clear that these penal provisions are not enforcible against American factory owners.