FO371-31667 — Page 102

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*

Entûr.

The Chinese Engineering and Mining Company

and the Kailan Mining Administration.

The Chinese Engineering and Mining Company share with the Lanchow Mining Company (Chinese) of Tientsin the ownership of properties and a concession for coal mining in the Kaiping Basin. The Kailan Mining Administration is a partnership between these two companies for administrative purposes. Our recent interest in the affairs of these concerns arose from the letter sent to us by the Chinese Engineering,o 194! and Mining Company on the 11th December 1941 (F 13717)|

637rom this it appeared that the British staff of the Kailan Mining Administration, through their manager, Mr. E.J. Nathan, had made a compact with the Japanese in October 1941 to the effect that, in the event of war breaking out between Japan and Great Britain, the staff of the company, in return for good treatment for themselves, would continue to operate the mines for the benefit of the Japanese. We were naturally much perturbed to receive this naïve admission of British subjects assisting the Japanese in this way, particularly as the coal which is produced at the mines in question is of a type which is important to the Japanese war effort, the Japanese steel industry being said to be dependent on the mines for a large percentage of its coking requirements.

We took the matter up with the Trading with the Enemy Branch, and with their concurrence we wrote to the company on the 26th February ( 130281hting out that we had given careful consideration to the documents forwarded, since they contained "undertakings which appear difficult to reconcile with the duty of a British subject to abstain by all means in his power from giving aid or assistance to the enemies of his country". We said that the undertakings given by Mr. Nathan could only be explicable on the assumption that they had been extorted under pressure and pointed out that Mr. Nathan had, so far as we knew, made no attempt to explain his action at the time to the British authorities in North China. We asked the company to provide explanations in order that the serious issue involved might be further considered.

The company sent us a long reply on the 4th March (F 2152, the main effect of which was to show that while they have no desire to assist the enemy voluntarily, they regarded business and dividends as the only important consideration and had no idea of making any sacrifice of these for the national interest. The company indeed said that they thought that Mr. Nathan could have adopted no other course than the arrangement which he made. The letter reminded that Mr. Nathan had attached the condition that he would only continue this arrangement So long as he did not get contrary instructions from his government

omitting to mention that by failing to inform us of the arrangement reached Mr. Nathan gave us no opportunity of expressing our views in time.

No reply has as yet been sent to this letter, which is still under discussion with the Trading with the Enemy Branch (and also the Treasury). In the meantime this Department has

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conducted /

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