The Consul General at Shanghai (Gauss) to the Secretary of State
[Received April 20—4:30 a.m.]
293. 1. Conversations are proceeding between the Municipal Council and the Counselor of Japanese Embassy in regard to increased Japanese representation in the police administration and police arrangements in the northern areas. It is expected that an agreement will be reached which will restore greater measure of police control in the northern areas and at the same time introduce a number of Japanese police officers nominated by the Japanese authorities into responsible police positions in those areas.
2. Japanese naval authorities have modified regulations governing movement of goods in areas north of Soochow Creek so as to waive requirement for permits except in the case of entry or removal of arms munitions and explosive materials and removal of iron and steel and manufacturers thereof and bricks. This move is indicated as a beginning of effort to restore situation in northern areas to more normal condition.
3. Conversations regarding resumption of Whangpoo Conservancy work are proceeding with Counselor of Japanese Embassy and it is believed that a reasonably satisfactory temporary arrangement may be reached shortly.
Repeated to Peiping, by air mail to Tokyo.