FO371-31667 — Page 78

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and of the

if the draft

or

probably morning will.

this paper does not shams them

A

We might send 171⁄2 EenforgTWEB a copy of in signa

off

under cover

cover of

A

oft. on

the above lines.

SP. Zound.

10/6.

A memo: on The origin of this question is in F4163.

I have spoken to the Trading with the Enemy Branch, who agree with our sending another stiff letter to the company as provided for by the present draft. If this letter is approved (it does not prejudice any further action which we may subsequently decide to take against the company), we should, when sending a copy to T.W.E.B. as proposed by Mr. Young, also add an account of Sir M. Peterson's conversation with Mr. Young (as recorded in F 4163) and send a copy to the Treasury.

As regards the question of putting in a controller I am afraid it is true that there is little chance that this would lead to our being able to take action against the company and therefore it is difficult for us to press the T.W.E.B.

On

the other hand, I gather from a telephone conversation which I have had with them that they would be quite pleased to make such an appointment, on the off chance, and I do not think we should do anything to dissuade them. We should have to add that we see no chance of being able ourselves to follow the matter up on political issues any further for the present.

Rowan.

10th June, 1942.

(PlagA)

61 Think we must

say that we must- leave the decision to TWEB.

The circumstances in which the British executives of the Kailan coal mines, near Tientsin, are carrying, on operations for the benefit of the Japanese are set out in the memorandum in F.4163 - Flag A

We have already attempted to convey to these British executives, through the Swiss Government, a message that our general ruling against British subjects continuing voluntarily to render services which must be regarded as assisting the Japanese war effort applies in particular to them (see F.3471).

The grounds on which the least dividend-minded of the Directors of the Chinese Engineering and Mining Company seeks to defend the action of the British executives on the spot are given in my minute of an interview with Mr. Young, also in F.4163 Flag A. The general trend of Mr. Young's arguments was that we cannot afford to do more than the Chinese, who allow their compant to function freely, and that the British subjects on the spot may be relied upon to do their best to slow up production, and more especially distribution, as far as possible.

I think we should now proceed to make things as unpleasant as possible for the Company in London,

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