Foreign Relations of the United States Diplomatic Papers, 1938, The Far East, Volume IV

893.70/42: Telegram

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

Shanghai, September 22, 1938—2 p.m.
[Received September 22—11:10 a.m.]

1256. Your No. 540, September 19, 7 p.m.

1. Department is correct in assuming that balances already deposited in suspense account by cable companies consist entirely of money which would normally go to the Chinese Government. Commercial Pacific Cable Company has no interest in the Marconi Loan and item 1 of the Japanese demands does not concern us and should be disregarded. The three cable companies here prepare joint balance sheets and deposit the balances due the Chinese Government in a joint suspense account; the three companies are usually addressed jointly by the Japanese authorities and usually reply jointly; the three companies also usually send identic letters to their consular representatives. This accounts for the inclusion of item 1 in the letter to us. As to item 4, following is exact text of the Japanese demand:

“I beg to repeat that any deduction from the terminal rate on your part shall not be approved of by the Japanese military authorities, unless it be previously agreed upon by them.”

2. I recommend that as suggested by Lockhart in his 1244, September 17, 4 p.m., I be authorized to take action similar to that of my British and Danish colleagues. Early instructions are requested.⁹⁶

Repeated to Peiping and Tokyo by mail.

Gauss

96. Recommendation was approved by the Department in its telegram No. 546, September 22, 6 p.m.