Memorandum of Conversation, by the Ambassador in China (Gauss)3

During a call on Dr. Soong this noon, I referred to our conversation of several weeks ago when I inquired what steps were being taken by the Chinese Government to implement the provisions of Articles II and III of the 1943 Treaty in regard to the recognition and protection of legitimate American interests in the International Settlements at Shanghai and Kulangsu and the Diplomatic Quarter at Peiping.

I recalled that at that time Dr. Soong had asked what was the occasion for our inquiry in the matter. I had since learned from Washington that the inquiry arose out of interest on the part of American companies—such as the power company and the telephone company at Shanghai, holding municipal franchises—and that it was the feeling at Washington that China should give attention to this matter.

Dr. Soong said that the Chinese Government does not know the details of these municipal franchises at Shanghai and elsewhere—and we went over the list which includes not only power and telephones (American) but also tramways, bus lines, the gas company, [Page 1158] etc. He said that what is in the treaties is there, and he felt that as the question is not a current one it is preferable not to go into it.

I said that I felt that the American interests concerned were probably looking forward to the reoccupation of Shanghai and the necessary plans to be made for reestablishing their operations; plans which might involve the provision of additional equipment, material, supplies, etc. and it seemed to me that it would be most desirable that China come out and say that these franchises would be recognized and these public utilities will be expected to continue to function.

Dr. Soong, however, seemed to feel that what is in the treaty stands; and as the question is not a live one, there is no occasion to do anything about it at this time—particularly since the Government here is not informed on the various franchises, etc. In this connection I pointed out to him that we recently received a dossier from the American power company interests—a collection of their several agreements, contracts, etc., and that a copy of this dossier was sent to the Foreign Office by the Embassy, so that the Chinese Government is well aware of the American interest in the matter of electrical power in the Shanghai area.

C. E. Gauss
  1. Copy transmitted to the Department by the Chargé in China in his despatch No. 3079, October 19; received November 7.