893.51 Salt Funds/241
The British Embassy to the Department of State 20
Aide-Mémoire
The attention of His Majesty’s Government in the United Kingdom has recently been drawn to the serious deterioration in the status of the foreign personnel of the Chinese Government Salt Administration. Complaints are made of the inadequacy of the present scale of salaries and allowances, the unhealthy conditions in which foreign members of the Administration have to live in the interior, the unsatisfactory nature of the present arrangements for furlough, and the increasing denial in practice of the principle of joint responsibility of the Chinese and foreign staff in the conduct of the Administration. The first of these evils has now been greatly intensified by the recent fall in exchange and the increased cost of living in China, for which no adequate compensation has been offered to the foreign staff. These conditions are likely to accelerate the retirement, even on the existing highly unsatisfactory financial terms, of the already diminished foreign [Page 863] personnel, and if present conditions continue, it seems that it will not be long before foreign influence in the Service is reduced to negative proportions.
In view of the reports to the foregoing effect, the Commercial Counsellor to His Majesty’s Embassy at Shanghai asked Mr. F. E. L. Dobbs, a British subject who is an Associate District Director of the Chinese Government Salt Administration, at present stationed in what remains of the former headquarters in Shanghai, to prepare a confidential memorandum with special reference to the present conditions of service of the foreign staff, and the remuneration received by them from the Chinese Government. A copy of this memorandum is enclosed.21 Attached to this memorandum is a Statement, copy of which is also enclosed,21 showing the monthly salaries of the foreign staff of the Salt Administration as at June, 1939, with comparative figures of expectations based upon the rates of salary and exchange in 1924.
Representations have been made from time to time by His Majesty’s Embassy at Shanghai to the Chinese Government, in which it has been made clear that His Majesty’s Government regard the questions of treatment of the British personnel in the Service and of the joint responsibility of the foreign staff as bearing on the general efficiency of the Service, with considerable interest. Satisfactory assurances have from time to time been received from the Chinese Government on these points. Very little has, however, been done by the Chinese Government to implement these assurances, and in the meantime, of course, the political situation—with most of the salt-producing areas falling into the hands of the Japanese, or at any rate to such an extent as to make them impossible of access for the foreign staff—has greatly deteriorated, for reasons for which the Chinese Government cannot be held responsible. It is, moreover, the unfortunate fact that the question of the treatment of the foreign personnel generally has in the past tended to become obscured by questions of the treatment of certain individuals amongst them.
With the recent drop in exchange, the position of the foreign staff of the Salt Administration appears to be fast becoming quite untenable. In the meantime the Chinese Government have found it necessary to default in the provision of the comparatively small quotas required from the salt revenues for the service of the loans secured on those revenues. This action may be justifiable in the circumstances, but it seems far less justifiable for the Chinese Government to reduce the foreign personnel of the Administration to such a negligible factor that, if and when the Chinese Government regains control over its territories, the efficiency of the Service will have been so gravely impaired that the second best source of revenue in the country, which [Page 864] will be urgently required as a basis for new loans for rehabilitation, will, for that reason apart from any others, no longer be available to anything like the same degree as previously.
When the Organic Law was promulgated by the Chinese Government in 1936, and threatened to reduce the position of the foreign personnel to that of mere “assistants”, as the enclosed memorandum puts it, assurances were obtained from the Chinese Government that the principle of joint responsibility would not be impaired. These assurances seem to have carried little weight in practice, and it now appears that at a meeting of the Ministry of Finance in Chungking on the 10th June last, new regulations were submitted for approval under which no new foreign officers are to be appointed to the Service, and the pay of the existing officers is to be still further reduced.
The Commercial Counsellor to His Majesty’s Embassy has discussed this matter with the United States Commercial Consul at Shanghai who, it is understood, feels equally that some effective action should be taken to remedy the present situation.
In the circumstances His Majesty’s Government would welcome an expression of the views of the United States Government as to the desirability of some form of parallel action with His Majesty’s Government in conjunction eventually with the French Government vis-à-vis the Chinese Government whether by means of formal representations or in the form of a personal approach to the Chinese Minister of Finance. The recent declaration by the Chinese Government of default in payments of the Customs and Salt loans would appear to afford a convenient pretext for raising the matter with the Chinese Government at this time and enquiring their intentions. No doubt any fresh representations in the sense proposed would, as before, meet with the usual assurance of good intentions, but it appears nevertheless essential to insist that genuine steps be quickly taken to put a stop to the present disintegration of the foreign staff of the Service.