893.00/14595: Telegram
The Consul General at Shanghai (Lockhart) to the Secretary of State
[Received 9:25 p.m.]
1258. 1. In estimating the political and economic situation at Shanghai based on observations made since my arrival on October [Page 433] 23, I am led to the conclusion that there has been a deterioration in practically all phases of the local situation since I was last here. There are abundant signs that further deterioration will take place, among these signs being:
- (1)
- The evident determination of the Nanking Government to issue a new currency, which will add confusion to a currency situation already demoralized;
- (2)
- gradual imposition on this area by the Japanese of the same sort of drastic import and export trade restrictions that have stifled trade in the north:
- (3)
- farther tightening of control of the customs by the Japanese;
- (4)
- the evil of and private gain connected with the permit system;
- (5)
- the skyrocketing of all transportation charges, especially on inland and coastwise waterways;
- (6)
- tightening of blockade restrictions and seizures of vessels engaged in transporting food products to Shanghai and raw materials for manufacture;
- (7)
- rapidly rising cost of living much of which is due to manipulation and monopolistic practices;
- (8)
- a rising tide of restless, hungry, unemployed people whose desperate plight is already causing concern to the municipal authorities;
- (9)
- increasing fear of Japanese encroachments on, if not complete control of, all municipal functions at Shanghai;
- (10)
- spread of crime and lawlessness and fear of break down of law enforcement agencies and impairment of effectiveness of courts;
- (11)
- increasing municipal taxes, and
- (12)
- permanent disruption of financial and trade connections that have long existed with America.
2. The foregoing are among the more important adverse factors bearing on the situation as it exists at Shanghai today and some of these have prevailed for months and have already seriously affected the political and economic status of the port. The outlook for the American business man and the American missionary is extremely discouraging. There is the further consideration that it is by no means certain that if and when the two countries now engaged in the Far Eastern conflict exhaust themselves, as they ultimately must, and hostilities cease the position of the American business man and missionary will be substantially and definitely improved. They have both lost ground which it will be difficult, if not impossible, to recover whatever the outcome of the conflict may be.
Sent to the Department. Repeated to Chungking and Peiping. Code text by air mail to Tokyo.