893.102S/1971
The British Embassy to the Department of State
His Majesty’s Government have been considering the problem of the financial difficulties of the Shanghai Municipal Council and the cognate question of whether the control of the Council can be prevented from falling into the hands of the Japanese. Among the proposals which have been made for dealing with the financial question is one put forward by the British and American councillors that a credit of £250,000, repayable after 3 years, be guaranteed to the Council. It has been suggested that this credit should be jointly guaranteed by the United States Government and His Majesty’s Government, the United States guarantee to be in proportion to their representation on the Council—i. e. for £100,000 as against £150,000 for His Majesty’s Government.
No decision in the matter has yet been reached in London and no undertaking can be given at the moment as regards His Majesty’s Government’s attitude towards the proposal that they should guarantee a share of this credit, for which in any case Parliamentary sanction would be required. His Majesty’s Embassy has however been instructed to enquire informally of the State Department as to the attitude of the United States Government in the matter and as to their willingness to join with His Majesty’s Government in guaranteeing this credit in the manner suggested. If the United States Government are willing to take action in the sense suggested would Congressional approval be required before the credit could be guaranteed?
His Majesty’s Embassy have also been instructed to inform the United States Government that steps are being taken to facilitate the splitting of the properties owned by British subjects in Shanghai in order to increase the British vote before the next municipal election in April. It is felt that the repayment of the suggested credit would be made more certain if the United States authorities in Shanghai were to take similar action.