Office of the Historian

893.01/654: Telegram

The Consul General at Hong Kong (Southard) to the Secretary of State

Hong Kong, February 20, 1940—11 a.m.
[Received 3:55 p.m.]

56. Arthur N. Young67 who returned to Hong Kong from Shanghai on February 16 requests me to communicate the following comment which he has dictated to me:

1.
Influential Chinese in Shanghai informed me February 10 that they are much concerned about the possibility that if and when the Wang Ching-wei68 regime is set up, one of its early acts will be to seek control of the Chinese courts within the International Settlement and the French Concession. They consider that if such control be obtained Chinese not cooperating with the regime would have no assurance that they could retain possession of their property, operate business enterprises, collect rents, enforce contracts or have protection of their persons. Also they fear pressure in the event of interference with land records.
2.
In my opinion serious prospect of such developments would react very unfavorably upon the economic and financial position of Shanghai to the detriment of both foreign and Chinese interests. Chinese banks would be affected and a flight of capital might ensue. It will be recalled that announcement of the Tientsin blockade last June69 was a major adverse factor if not the chief factor in precipitating the financial difficulties of the Hong Kong dollar. In the circumstances it is therefore much to be hoped that means can be found to prevent such developments from taking place.
3.
Besides discussing the subject with an officer of the American Consulate, I talked with British and French officials. The British representative suggested that any reply to the Wang Ching-wei régime could hardly expect consideration of establishment of courts on a de facto basis unless and until it had gained substantial strength and demonstrated that it had set up a reasonably effective judicial machinery involving higher courts and appeal procedure analogous to that of the Chinese Government. The French representative suggested the question that might arise in case any of the present judges should be prevailed upon to join the new régime in which case Chungking would doubtless appoint new judges. It was intimated that both their governments would be disposed to resist such measures as far as practicable, and it appears that not long ago the Japanese made some approaches on the subject. Doubtless determined foreign resistance to such measures would stiffen the attitude of the present judges if they are pressed to (defect?).

Repeated to Chungking, Peiping, Shanghai.

Southard
  1. American adviser to the Chinese Ministry of Finance.↩
  2. Former Deputy Leader of the Kuomintang (Nationalist Party) at Chungking hut at the time active in Japanese-occupied China.↩
  3. See Foreign Relations, 1939, vol. iv, pp. 163 ff.↩