893.70/49: Telegram
The Consul General at Shanghai (Gauss) to the Secretary of State
[Received November 16—3:50 p.m.]
1416. Reference my No. 1394, November 5, 4 p.m., regarding Japanese demands on the foreign cable companies. The three foreign cable companies have now submitted to their consular representatives a memorandum in the following sense: their only concern is the continued effective operation of their services without disturbance from the de facto authorities and protection against an eventual claim from the Chinese authorities that the companies have without warrant broken their agreements with the National Government and against a double claim for the monthly revenue balances. As the companies are unable to persuade the Japanese authorities to allow a continuance of the status quo pending cessation of hostilities, they consider that the only alternatives are: (1) for the respective Consuls General to insist on maintenance of the status quo, at the same time making it clear to the Japanese Government that the responsibility for this decision rests with their respective governments and not with the companies, or (2) that the respective Consuls General advise the companies that in the circumstances prevailing, there is no alternative but for the companies to comply with the Japanese demands under force majeure. [Page 538] The memorandum concludes that if the first alternative is chosen the companies would have to rely upon effective protection from their respective governments or possible interference by the de facto authorities with the operation of the cable services, while in the second alternative, the companies would not run any risk of such interference and at the same time they would presumably be protected under force majeure for eventual claims from the Chinese authorities.
2. The Japanese letter and the companies’ memorandum were considered at a meeting this morning of the Danish Minister, the British and Danish Consuls General, the British Commercial Counselor of Embassy, and myself and it was agreed that matter should be reported for the instructions of our respective governments with the general suggestions that reply should be sent to the Japanese Consul General declining to recognize the Central China Telecommunications Company, refuting the Japanese statement that the cable companies are taking advantage of the confusion now prevailing in order to claim more rights than formerly granted them by the National Government, and pointing out that certain adjustments to meet the local situation have already been made by the cable companies at the instance of the Japanese military and that no further adjustments appear reasonably necessary pending the termination of hostilities when a regular and orderly settlement of any questions should be possible. It is further suggested that such reply if and when sent to the Japanese authorities might be communicated to the cable companies with the statement that the responsibility of decision in respect to specific arrangements for the continuance of cable services must rest with the concerned company but that if the company should decide in any case that it is not in a position to meet the wishes of the Japanese authorities their government is prepared to give such support as may be possible by way of diplomatic representations to the Japanese authorities or government.
Repeated to Tokyo, Peiping and Chungking.