893.102S/2415: Telegram

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

241. Department’s 122, February 25, 9 p.m.

With reference to paragraph 1, I greatly fear that suspension of land regulations, or any part thereof, would result in prolonged delay and that members of the commission, and the Consular Body as its source of authority, would be faced with knotty problems, legal and otherwise, in exercise of administrative and financial functions. Commission must possess unquestioned legal authority to function satisfactorily and I foresee difficulty obtaining sanction of all governments concerned within time limit, unless British, American and Japanese Governments act speedily. Regarding paragraph 2, there are two special committees now working—one to revise tax system and explore possibilities [of] new sources of income and other to revise rates on owner occupied property. These two committees hope to have reports ready by April but this not certain. Details regarding nature of recommendations not yet available. Should such reports be available for April meeting of ratepayers and be adopted, amelioration referred to in paragraph 3 would probably follow, at least in some measure. With reference to paragraph 4 re the applications [reallocation?] of membership [a plan?] along lines suggested in paragraph 4 of this telegram would ease situation and should, if political considerations do not interpose, enable ratepayers’ meeting to provide Municipal Council with broader powers of taxation.
As regards feasibility, commission form of government as substitute for present elective council offers possible solution but steps necessary to bring about such change legally might be difficult to put in operation within short time remaining before election April 2. [Page 829] There is widespread dissatisfaction with present arrangement which requires election members on basis of property and rates and under a vague and questionable practice of so-called lot-splitting. Taxation system undeniably unfair and discriminatory. General demand for reform and equalization taxes.
I do not believe either British or American communities willing to accept any plan which would surrender control municipal affairs to Japanese or to combination Japanese and Chinese. At special meeting Executive Committee American Association called discuss British proposals, it was agreed American community should insist, if there is to be any reapportionment of present political representation, that American representation be same as British and Japanese, that is, if British and Japanese have 3 members each, Americans also shall have 3, and that there shall be equal representation as between occidentals and orientals with deciding vote to be cast by Chairman who shall be British. Rule at present is that Chairman may cast his own individual vote and in case of tie shall cast deciding vote. It was also sense of meeting that Occidental control of council (or commission) shall be retained by appointment of 2 satisfactory neutrals if number of councilors (or commissioners[)] is to be maintained at 14 [(]as at present) but with only 3 Chinese members. If Chinese membership is maintained at 5 as at present, and in addition 3 British, 3 Japanese and 3 Americans, the Oriental membership will then be 8 and Occidental 6, thus giving Chinese-Japanese control.
A plan which I believe would have the best chance of acceptance and at the same time retain control would be a commission formed of 3 British, 3 Americans, [3] Japanese and 3 Chinese, making 12 in all, with a British Chairman. This would avoid necessity selecting a neutral or neutrals and would have virtue giving the military party most concerned equal voice in administration and would in no sense be partisan. Chinese authorities at Chungking, if they can be brought by American and British Embassies to realize situation that is developing here and far reaching [change?] that may ensue if amicable adjustment is not arrived at, should be willing accept such an arrangement. To reject it would almost certainly lead, if not now at least later, to Japanese domination of Settlement affairs. If this proposal meets with Department’s approval, I should like authority discuss it with American members of council and with my British and Japanese colleagues. This would seem offer only reasonable guarantee maintaining present balance authority. While by no means certain, it would be acceptable to Japanese or Chinese, I believe it to be more feasible than plan described in my 186, February 16 [13?], 4 p.m. and if agreed to ought to remove danger from holding elections and ratepayers’ meetings.
Japanese Consul General now engaged in consulting his ratepayers’ association, residents’ association and army and navy authorities preparatory submitting British proposal to Tokyo for instructions. Japanese Consul General agreeable to British proposals in principle but stresses need refrain from any action impinging Chinese sovereignty and desires defer discussion details, especially re apportionment national representation, until Japanese Government gives formal approval.
I should greatly appreciate an indication of Department’s attitude towards the British proposals or the possible alternative procedure mentioned in paragraph 4 above. Matter is pressing and Department’s guidance is urgently needed so that I may be in position to discuss it with my interested colleagues and the concerned Americans. Affairs of the municipality are in a critical shape.

Sent to the Department, repeated to Chungking and Peiping.