893.50/5–1349: Telegram
The Consul General at Shanghai (Cabot) to the Secretary of State
[Received May 14—9:05 a. m.]
1639. [To Nanking:] Reurtel 550, May 10, repeated Department 989. Question of securing Chinese leadership to confront various aspects difficult circumstances now facing Shanghai has been repeatedly discussed by foreign officials and business leaders and on several occasions Chinese have been approached. Most of Chinese of sufficient importance to give weight to representations have left Shanghai and those left are far too frightened to take any initiative. We must, therefore, face stark alternative of taking initiative ourselves or letting matters take their course. Despite possible catastrophic results of latter, I realize former may, nevertheless, be even more undesirable. We must not, however, think we can evade issue or avoid being blamed for whatever happens in Shanghai. It seems to me clear that whatever we do or do not do, both Nationalists and Communists will try place on us responsibility for anything which goes wrong. Moreover, entire western interest in Shanghai is perhaps at stake. Under circumstances, much as I hesitate to recommend action, still believe some action at least to prevent demolition of utilities and industries (second query mytel 1550, May 7) desirable.
Re my third query, I do not advocate stockpiling in Shanghai beyond 30-day period already recommended and agreed as being minimum in which Communists can arrange for own supplies to reach Shanghai. My question is whether we should take any action whatsoever beyond that point to help Communists get supplies on commercial basis. My thought is that foreign interests here might cooperate to this end if they knew we had no objections. If Communists are as short of foreign exchange as they seem to be and Shanghai stripped as clean of assets as now seems probable, I do not see how the Communists can possibly arrange without some cooperation to secure supplies necessary to keep Shanghai running. It may boil down to issue of either extending private credit or seeing highly integrated economy of Shanghai, unique in China, utterly collapse with disquieting consequences. Should oil, food, cotton, et cetera, be unobtainable, I would expect Shanghai to be reduced to utter chaos and to become uninhabitable for westerners. If we expect collapse in Shanghai and either think Communists will thereby be embarrassed or at least intend to [Page 315] do nothing effective to prevent it, I believe we should have candor so to inform our citizens and perhaps those of other friendly nations. Under such circumstances, we feel that there would be no point to encouraging Americans even in vital positions to stay here but rather that we should urge them to leave now while they still easily can.
I realize this may be unduly pessimistic view to take of situation and yet, with facts as they appear, I think my conclusions are inescapable. Shanghai is in vastly more vulnerable position than Tientsin and even without demolitions has been reduced already to a worse economic plight than that of Tientsin before takeover. Economic prostration is increasing every day with numerous problems (such as adequate supply of currency, distribution of factory production, maintenance of employment and just utility rates) apparently insoluble under present circumstances. Tientsin experience indicates situation will for some time get worse after Communist occupation.
I see no reason to feel situation will correct itself in foreseeable future and that we should therefore either take constructive remedial action before crisis or should not delude ourselves that we can save any considerable part of our position and our assets at stake here.
Sent Nanking 907, repeated Department, EmbOff Canton 452.