Memorandum of Conversation, by Mr. Edwin F. Stanton, Special Assistant to the Director of the Office of Far Eastern Affairs (Grew)26

Mr. Fullam27 called on June 15 to discuss the question of the future status of the Shanghai Telephone Company, which is a subsidiary of the International Telephone and Telegraph Company. Mr. Fullam [Page 1055]said that he had been away from this country and had just recently returned from Brazil; that upon his return he noted a distinctly pessimistic attitude among American business concerns interested in doing” business in China; and that in this connection the feeling seemed to be that the Chinese requirements governing the operation of American and other foreign business enterprises in China were likely to be of a restrictive nature. Mr. Fullam expressed concern in regard to the Shanghai Telephone Company and wondered whether the Chinese would permit resumption of that company’s business in Shanghai on the basis of the Shanghai Telephone Company’s contract with the International Settlement and French Concession or whether the Chinese would insist on taking over the Shanghai Telephone Company and attempting to operate it themselves.

Mr. Stanton outlined for Mr. Fullam the Chinese views in so far as known to him, on the question of state ownership of utilities and commercial policy vis-à-vis foreign business enterprises and pointed out that Chinese thinking on both problems appeared to be fluid. In regard to the question of recognition by the Chinese Government of the validity of the Shanghai Telephone Company’s existing contract with the International Settlement, reference was made to the provisions of Article III of the Treaty for the Relinquishment of Extraterritorial Rights and Related Matters signed on January 11, 1943,27a which stipulates that the

“Government of the Republic of China in taking over administration and control of those Settlements will make provision for the assumption and discharge of the official obligations and liabilities of those Settlements and for the recognition and protection of all legitimate rights therein.”

Mr. Fullam said that he hoped that, in pursuance of these provisions, the Chinese Government would honor the Shanghai Telephone Company’s contractual obligations, but intimated that his company was quite prepared to revise the existing contract or enter into a new agreement with the Chinese Government, perhaps with some provision that after a period of fifteen or twenty years the Chinese would assume complete control of the Shanghai Telephone Company.

Mr. Fullam then brought up the subject of participation by the International Telephone and Telegraph Company in the reconstruction and extension of China’s telephonic communications after the war. He said that his company was considerably interested in this matter and would like to be of assistance to the Chinese, but of course that the matter involved Chinese policy with respect to utilities and terms and conditions the Chinese might decide to impose on foreign utility companies assisting the Chinese in various reconstruction projects. [Page 1056]Mr. Fullam said he had recently talked with Dr. Chang Kia-ngau, former Minister of Communications and now in this country as the head of the Chinese delegation engaged in exploratory aviation conversations, and with Dr. T. F. Tsiang, who headed the Chinese delegation to the United Nations Relief and Rehabilitation Conference. Mr. Fullam stated further that during the course of his conversations with Dr. Chang and Dr. Tsiang he had outlined to them the type of assistance which the International Telephone and Telegraph Company was in a position to render China and said that they had exhibited considerable interest. Mr. Fullam said he expected to have further conversations with the Chinese officials mentioned and would keep the Department informed of any further developments.

  1. Copy transmitted by the Secretary of State to the Ambassador in China in instruction No. 701, June 21.
  2. James B. Fullam, president of the International Telephone and Telegraph Company.
  3. Department of State Treaty Series No. 984, or 57 Stat. 767.