The British Embassy to the Department of State

Oral Communication

Now that Nanking has fallen to the Communists, while Shanghai is threatened with a possible battle, His Majesty’s Government think that the time has come to take stock and to consult with other Governments as to whether any steps should be taken to meet the situation which confronts them.

2. Representatives at Nanking.

His Majesty’s Government hope that the State Department will be disposed to agree that it is of great importance that the common front which has so far been presented in this connexion should be maintained. They trust that the public announcement of the intention to recall the United States Ambassador for consultation does not indicate [Page 734] any departure from the position hitherto adopted by the Atlantic Group on retention of representation. It is to be expected that the Communists will try to break up the common front, and though it is impossible to predict what will happen, it is thought that any such attempt should be resisted for as long as possible. Such indications as have been received from His Majesty’s Ambassador at Nanking25 do not suggest that the Communists are as yet contemplating any drastic steps towards Foreign Missions.

3. Warships in the Yangtze

Though through force of circumstances there was not time for consultation between Governments, Governments seem to have reached the same conclusion about the retention of warships in the Whangpoo. Further clashes between warships and the Communist forces would be very likely to have an adverse effect upon the position of our respective representatives and communities. It is also desirable to avoid being put in a position where our ships are bottled up and can only withdraw with the permission, or under the orders of, the Communists.

4. Shanghai

It is the situation in Shanghai which causes His Majesty’s Government the most serious concern. A battle for Shanghai can, in their view, in no way alter the fate of the National Government. On the other hand, it would be an act of criminal folly to involve this densely populated area in the conflict, since quite apart from battle casualties the effect upon the economy and welfare of the people can only be disastrous.

5. Even without a battle, recent reports show that the economic situation in Shanghai is parlous to a degree. His Majesty’s Government are not sure how the United States Government view this matter, but think that they would agree that it would be inadvisable to withhold supplies from the Shanghai area which will enable it to function at any rate to some degree and which can be paid for. The Chinese Minister stated to the Foreign Office this morning that United States deliveries of cotton are being diverted from Shanghai. If this were to result in large-scale unemployment for operatives in cotton factories, a critical situation might develop. Similarly the withholding of other vital supplies (in particular, of course, rice) might cause a breakdown of public utilities, and finally the total collapse of law and order.

6. It may be that, when the Communists occupy Shanghai, our Governments should point out to them at an early stage that they will have to depend on outside resources to maintain the life of the city, and that unless they treat foreign business interests in quite a different way from the treatment accorded to such interests in Tientsin, [Page 735] there will be a complete breakdown for which the Communists themselves will be held responsible by the entire population. But we think we must be careful not to contribute to such a breakdown before the Communists arrive, because then we shall be held responsible.

7. The Foreign Office would be grateful to learn the views of the State Department on these and related questions as soon as possible.

  1. Sir Ralph Stevenson.