War, or because they never had it, being succession States of the Russian and Austrian Empires. The countries still possessing extraterritoriality are listed, with the number of their nationals, in the table below: (Statistics of the Hsinking Government) British India United States France Belgium Italy Switzerland Denmark So far as the Belgians are concerned, this official figure is certainly less than the actual number, for in the province of Jehol there are already more than 50 Belgian missionaries, and probably as many more in the province of Chahar which seems to be completely occupied now by the Japanese-Manchu army. We see from these figures, even if they are somewhat below the actual figure, that the number of foreigners still enjoying extraterritoriality is very small; moreover, a large number of those are Catholic or Protestant missionaries; although France continues to protect the Missions the presence of an Apostolic Delegate at Hsinking permits the direct settlement of many questions concerning the Catholic religious institutions; as to the Protestant missionaries, the tendency among them is to avoid availing themselves of their privilege of extraterritoriality in their relations with the authorities; so far as other cases are concerned the consuls have in general tried to settle each matter in a friendly way with the local authority, according to the particular circumstances; nevertheless the English consular court has continued to function in the last few years to try certain insurance cases or usury cases, of which offense the Hindus commonly render themselves guilty. The Manchu courts are still in full course of reorganization, which renders their operation very slow; the young Japanese magistrates who form a framework for the Manchu judges are animated, it is said, by a spirit of good will, but are still lacking in local experience. The declaration of the Ministry of Foreign Affairs will perhaps not have a very great practical bearing but it constitutes, for a group of Powers, an invitation to break a silence of over four years and to enter into pourparlers on the subject of the status of their nationals in the new Empire; these pourparlers, the utility of which is making itself felt more than formerly, seem bound, however, to remain subject to a prior settlement, or at least the adoption of a modus vivendi, between Japan and China, concerning the Manchurian question, which would permit of a modification of the point of view of this group of Powers concerning this question, by at least an implicit "de facto" recognition of the young Empire. The German-Manchu Trade Agreement of April 30, with the presence, soon, of a German Trade Commissioner at Hsinking, already gives German trade a privileged situation; without being able to claim such a situation, which is explained not only by the fact that Germany is the chief European buyer of Manchurian products, but also by political reasons sufficiently known to the American Government, arrangements pursuant to the recent declaration of the Ministry of Foreign Affairs could not but be favorable to the development of the interests of such countries as might conclude them with Manchuria. An arrangement dealing only with the régime applicable to the nationals of such countries would obviously not justify the claim to obtain the inclusion of the most-favored-nation clause; it is even probable that it would never be obtained in any case, for it would be for Japan the abandonment of her theory of "her special interests" in Manchuria which she has been invoking so frequently for the past 30 years; nevertheless, it is allowable to think that in exchange for the official abandonment of the privilege, rights would be obtained analogous to those of foreigners in Japan proper. Furthermore, the representatives of those Powers would have officially, as have the German representatives already, an easy access to the authorities of the capital in order to effect all steps and negotiations relative to the interests of their nationals. 793.94/8130: Telegram The Consul General at Canton (Linnell) to the Secretary of State CANTON, September 10, 1936-3 p. m. [Received September 10-1:45 p. m.] Regarding Pakhoi incident, my telegram September 8, 11 a. m.,96 it is now learned that the killing of a Japanese occurred on the border "Not printed. on September 3rd. The Japanese gunboat Saga has sailed from Canton for Pakhoi carrying two officials of the Canton Japanese Consulate General who will investigate case. Dr. Tyau, special delegate for Executive Department's Foreign Affairs states he advised Japanese Consul in charge not to send delegate to Pakhoi for fear of possible mob incidents but they proceeded nevertheless. Tyau has sent his assistant to Pakhoi to make an investigation. The Japanese Consul in charge states that they will investigate especially whether the alleged position was given out by 19th Route Army forces while carrying on anti-Japanese demonstration. If this is found to be the case Japanese attitude will become much firmer. Sent to the Department, Peiping, Nanking. LINNELL 741.94/69 The Ambassador in China (Johnson) to the Secretary of State No. 710 PEIPING, September 11, 1936. [Received October 5.] SIR: I have the honor to refer to despatch No. 1970 of August 6, 1936, from the American Ambassador at Tokyo in regard to AngloJapanese relations. Mr. Grew points out that, although Great Britain does not at this time seek an ally in the Far East she would like to have a friendly Japan willing to guarantee and protect her interests in China and from whom she might seek relief from the growing danger of Japanese trade in the markets of the British Empire. The Ambassador considers whether there is ground for agreement between British and Japanese desires and mentions indications of a rapprochement between the two countries. There are also suggestions of such a rapprochement in China. British interests in China are considerable, particularly in South China, and her investments alone are valued at six times those of the United States. Should Japanese advocates (including the Japanese Navy) of Japanese expansion to the south gain control of Japan's policy of expansion, as Mr. Yoshida, the Japanese Ambassador to England, believes they will,* such Japanese expansion would be a serious threat to the interests of Great Britain, especially those in Hongkong and the vicinity. Already Great Britain has suffered from Japanese trade rivalry. Following the Great War, Japanese cottons made such steady inroads in the markets of India, long monopolized by Lancashire, that by 1932 Japanese exports to that country actually See Department's strictly confidential instruction No. 205, June 29, 1936, to the Embassy. [Footnote in the original. Instruction No. 205 not printed; see memorandum of June 25 by the Chief of the Division of Far Eastern Affairs, p. 220.] exceeded British exports by some 45,000,000 square yards. The result was the raising of the tariff wall against Japanese goods not only in India, but throughout the Empire. However, contrary to expectations, the total purchases of Japanese goods by India for the first half of 1934 were much much greater than for the first half of 1933 and in spite of the restrictions imposed by the Indian authorities the volume of cotton goods exported to India by Japan for the same period showed a considerable increase over the first six months of 1933. It is not only on exporting cotton to India that Japan has concentrated, but so successful has been the drive for export trade which she started in 1932 that her total exports of all sorts for the following year showed an increase of 63%. Her exports since that date have increased annually, although not at quite so rapid a rate. Obviously this is at the cost of other manufacturing nations. The visible Japanese trade with China (smuggling activities excluded) appears to have remained static during the last three years, but when one realizes that the value of her total trade with Manchukuo showed an increase in 1934 of approximately 44 million Yen over 1932, some 42 million of which represented exports, it is obvious that this is not the case. British exports to China on the other hand have shown a gradual decrease from 108,258,100 H. K. taels in 1930 to 80,004,000 H. K. taels in 1934. It would appear that it is British trade that is paying to a large extent the cost of Japanese trade expansion and of the many points at which the interests of Great Britain and Japan are in direct conflict, the most serious is their competition for markets in the Far East, particularly in China. When Japan seized Manchuria, the British Foreign Office, under the leadership of Sir John Simon, appeared to think that Japan would stop at the Great Wall and not disturb British interests in China proper. The extension of influence over Hopei and Chahar by Japan and the recent smuggling activities which that nation has condoned in North China have gone far to prove the fallacy of this belief. Great Britain's stake in North China, however, is not great: certain tobacco interests, approximately a 50% interest in the Kailan Mining Administration, and a share in the former Peiping-Mukden and the Peiping-Pukov Railways constitute her outstanding commitments. Of course she has the British Concession interests in Tientsin and various coastal shipping lines such as Jardine, Matheson, & Co. Ltd., and Butterfield and Swire, whose ships call at Tientsin. However, if it came to a question of going to war over these interests she would perhaps be willing to sacrifice them, but her southern sphere of influence is another question and from the long-term point of view the situation for Great Britain presents many difficulties. The sending of Sir Frederick Leith-Ross, Chief Economic Adviser to the British Government to China, was doubtless due to a feeling of a need for serious study of these conditions. It is also noteworthy that the newly appointed British Ambassador to China has stopped over in Tokyo for a visit with his Colleague there before proceeding to his post in China. Whether Great Britain has evolved a policy for dealing with her Far Eastern questions, it is difficult to say. Sir Alexander Cadogan, recently said that he had no idea of the British policy in regard to the Far East. Sir Alexander added, however, that he was inclined to believe that British sentiment and American sentiment were similar in that neither nation would fight in the Far East. From the British point of view, the troubled situations closer at home would appear to preclude any other stand. Confronted with grave European problems, she is presumably attempting to evolve some other method of protecting her interests in China short of war. It is as yet unknown what this method is, but as Great Britain has always appeared to steer the course of an opportunist, some solution by compromise may present itself. There appears to be evidence that this solution entails a more friendly attitude towards Japan. In my despatch No. 584 of July 17, 1936,97 I pointed out that the members of the British Embassy staff here expressed the belief that they had gone much farther in the Sasaki Case 98 than they would have done in the course of normal events to comply with the wishes of the Japanese and to prove to their own satisfaction that the British soldiers implicated were not guilty. The Consul General at Shanghai, in a letter to me dated August 17, 1936, a copy of which is enclosed," citing the fact that the British forces in Shanghai took no action in reference to the functioning of Japanese patrols in the British Defense Sector in Shanghai, says that he cannot escape the impression that a definite effort is being made by the British authorities to avoid any differences of opinion with the Japanese and to defer to them in local matters. In the same letter Mr. Gauss points out that he has good reason to believe that the British Consul General consulted with the Japanese Consulate General and agreed upon a text of a letter to the Municipal Council in regard to the question of Factory Law and Factory Inspection in Shanghai before proposing as Senior Consul at the Consular Body meeting the letter in question. The question was one which entailed a change on the part of the British Consul General from the course he had previously given Mr. Gauss the impression † Memorandum of conversation held on July 2, 1936, between Sir Alexander Cadogan and Mr. Ray Atherton enclosed in the Department's strictly confidential instruction No. 223, of July 22, 1936. [Footnote in the original. Instruction No. 223 not printed; see memorandum of July 13, by the Counselor of Embassy in the United Kingdom, p. 241.] 07 Not printed. 9 British Embassy guard members were accused of killing a Japanese at Peiping in a brawl. |