893.811/998: Telegram

The Consul General at Shanghai (Lockhart) to the Secretary of State

900. The Japanese military who seized the vessels and equipment of the Whangpoo Conservancy Board soon after the present hostilities began have persistently refused to return these vessels and equipment to the Conservancy Board, and have forced the abandonment of the general conservancy work and used some of the vessels for dredging along the Japanese owned wharves in the Whangpoo. All efforts to persuade them to restore the conservancy work to normal have failed and shipping companies have in recent weeks been forced to fall back upon private dredging operations. This question was gone into with the Japanese Consul General by the Senior Consul, the British Consul General and myself recently and it was pointed out that the Whangpoo is rapidly deteriorating as a navigable stream. The Japanese insist that, as a condition precedent to returning the vessels and equipment to the control of the Conservancy Board, the Board agree to the appointment of a Japanese engineer-in-chief along with a secretary to be attached to the Board, a second officer on one of the dredgers, a third officer on another, a second engineer on still another, and a chief officer of a buoy tender, all to be of Japanese nationality. It is possible that the Board, which may seek the concurrence of the interested consular officers, while agreeing to the appointment of the subordinate officers above mentioned, will propose as an alternative to the Japanese proposals that the title of the new engineer post shall be associate engineer-in-chief and that the appointment shall be only for the duration of the Sino-Japanese conflict; that the present Chinese engineer-in-chief shall remain in office; that the new associate engineer-in-chief shall possess the [a?] good knowledge of English; that all vessels, equipment, et cetera, shall be returned to the Whangpoo Conservancy Board before the associate engineer assumes office, and that a definite date for the resumption of normal conservancy work shall be given.

2. I am doubtful whether the Japanese will agree to this alternative proposal, but I should like to know whether the Department perceives any objection to my associating myself with my other interested colleagues in recommending a settlement of the controversy substantially on the above lines. The fact remains that if the conservancy work is not resumed in the reasonably near future, the conditions along the Whangpoo will be such that large vessels cannot enter the port of Shanghai.

Repeated to Hankow and Peiping.