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In that event we should not be too rigid but should make

the best bargain we could.

The Prime Minister pointed out that the present

position was that we were being approached not by the

Chinese but by the United States of America. The choice

appeared to be whether we should wait or take the initia-

tive in the matter.

The Secretary of State for Foreign Affairs agreed

with most of the remarks of his colleagues. He had

gathered from the Foreign Office that morning that the

Chinese were not pressing the matter at the moment.

He did not wish to take any initiative.

If the United

States of America asked for our view he would reply that

we would prefer to wait until the Chinese raised the

question. He did not propose to go into details with

the United States of America, but if they raised the

matter he would reply on the lines indicated in his

Memorandum. For example, if the question of Shanghai

were raised he would state that we should prefer to have

Shanghai excluded from any extra-territoriality negotia-

tions. He was advised by His Majesty's Ambassadors in

Tokyo and Peking that it would be better not to raise

the question with the Japanese Government unless the

Chinese Government brought it up.

The Prime Minister said that the line proposed by

the Foreign Secretary was in accord with the views

expressed at the Meeting.

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