893.102S/2029
Memorandum of Conversation, by the Chief of the Division of Far Eastern Affairs (Hamilton)
During the course of a call made at his own initiative by Mr. Morishima, Counselor of the Japanese Embassy, there arose the question [Page 506] of various steps taken recently at Shanghai toward improving the situation there, such as the agreement reached between the Municipal Council of the International Settlement and the City Government of Shanghai in regard to policing arrangements in the western Extra-Settlement Roads area, the agreement reached between the Municipal Council and the Japanese authorities whereunder certain areas in the International Settlement were to be turned back to the control of the Municipal Council,67 and the activities of the Japanese authorities at Shanghai directed toward payment of certain American claims. I told Mr. Morishima that all these represented steps in the right direction. I reminded him, however, that American rights and interests continued to be subjected to interference in a fundamental way in many parts of China and in this connection I referred to the whole system of exchange control, export restriction, currency manipulation, and the setting up of monopolistic companies. I said that our information in regard to the Far East continued to demonstrate conclusively that the whole set-up in Japanese-occupied territory in China operated to give Japan and Japanese nationals a preferential position as compared with the position of other third power countries and their nationals. Mr. Morishima did not agree with my statements but did make two statements worthy of recording:
- (1)
- He said that it was impossible for the currency and exchange control system in effect in north China to be changed at this time but that upon the setting up of a new Chinese government it might develop that that new Chinese government would give consideration to making a change in the situation;
- (2)
- He said that he could assure me that the exchange control system now in effect in north China would not be extended to central China.