The European war opened in Shanghai with the battle of the flags. The International Settlement, which belonged to no nation and to every nation, took national symbols very seriously. As one old resident wrote:
All of us leaned on the flag and advertised our nationality. There are probably more flag poles per capita in Shanghai than in any other city in the world. The visitor who comes up the Whangpoo past the Bund usually thinks that some holiday is being celebrated, for a flag of some nation is flying from every roof. Hundreds of them fly daily in the residence sections. One gets so used to seeing them that a foreign house without a flag looks naked.1
The first skirmish took place in early September 1939 at the mat-sheds of the German tennis club: two swastika banners were hauled down by persons unknown. In the process the sheds were wrecked. The club’s premises were on the city recreation ground and race course which also housed other sports clubs of various nationalities. To avoid further conflict and to ensure that the war in Europe would not cause any interruption in all-important sporting activities and horse-racing, the ground trustees asked all members not to fly national flags.2
Meanwhile the German embassy and consulate, which occupied part of the British-owned Glen Line building, were instructed by the management on the first day of the war to remove the German flag from the building. The Germans appealed for reconsideration of the ruling and the owners referred the matter to the British embassy. The ambassador, true to the traditional neutrality of the settlement and evidently not yet attuned to the principles of total war, told the landlords ‘that he thought no great harm would be done, and that we might allow them to display the flag as they have always done’.3
The committees of the British and French clubs were reported to be ‘scratching their heads over the position of “enemy” members’.4 Eventually the head of the Nazi Party Foreign Organization in China, Ernst Wilhelm Bohle, solved the problem for them by issuing an order to all Germans in the country to withdraw from enemy clubs and to exclude enemy members from German clubs.5
In the French Concession Germans were refused building permits and commercial licences. Those affected turned out to be mainly Jewish refugees rather than Nazis. Officials promised to investigate individual cases to ensure that the innocent did not suffer; but at the same time it was reported that the French authorities ‘had solid grounds for suspecting that non-Jewish Germans, members of the intelligence service, have had their passports stamped with the glaring red “J” which designates German Jews, in order to avert suspicion’.6 Germans employed in British and French firms were dismissed: those whose passports were marked ‘J’ were eventually taken back by British firms – but not by French. Apart from these episodes, Germans were not molested, apart from one German resident who booed when King George VI appeared on the screen during a showing of The Lion Has Wings at the Cathay Theatre.
The Germans in Shanghai had long had something of a chip on their shoulder. Although Germany had well-established ties with China, her position in Shanghai had always been secondary in comparison with that of Britain or the United States. Her investments there were dwarfed by those of the Anglo-Saxon powers and her shipping and other interests in the region were also far smaller. In addition to their general antagonism to the Anglo-Saxon democracies, Germans in Shanghai harboured a special, local grievance: during the First World War, they had been deprived of their privileges, including judicial extraterritoriality. After the war most had been deported from China – a measure that they saw, not without reason, as an act of petty vengeance by the victorious powers. In the inter-war period German merchants re-established themselves but they remained deeply resentful of what they saw as the unfair treatment they had received.
The loss of Germany’s Far Eastern and Pacific dependencies after the First World War had diminished but not eradicated its interest in China. Its most important manifestation in the inter-war period was military: German officers played a major role as advisers to the Chinese army. Headed by General von Falkenhausen, they remained influential during the early stages of the Sino-Japanese War, though the budding alliance between the Germans and the Japanese led to the repatriation of most of them in mid-1938. At that time too the Germans withdrew their ambassador from Chungking, although for a while they kept some informal lines of communication open to the Chiang Kai-shek régime.
German foreign policy in the Far East in the period 1939–41 had a dual aspect. On the one hand, the Germans were eager to see the United States, Britain and France embroiled in conflict with Japan, since that would divert Allied resources from Europe. For this reason they backed a forward policy to the south by Japan – though they were less keen on further Japanese advances into the interior of China than on a Japanese push against Allied interests in places such as Shanghai, Indo-China and Singapore. On the other hand, Japan was seen by Germany as a strategic constraint on the Soviet Union. To that extent the Germans wanted Russia’s attention to be diverted from Europe by the simmering territorial disputes with Japan in the Soviet Far East. This would dictate a forward policy by Japan in the north. For a long time the Germans could not be entirely sure in which direction the Japanese would turn. At the local level in Shanghai, the Germans aligned themselves squarely with the Japanese in municipal politics, hoping, with misplaced optimism, that their ally would generously share whatever spoils might be forthcoming.
The Nazi party had been active among the German community in Shanghai since 1933 and by the outbreak of the war had succeeded in converting or neutralizing most non-Nazi influences – except, of course, among the German-Jewish refugees. Party branches also existed in Tientsin, Peking and other Chinese cities. Various subsidiary organizations, such as the Hitler Youth, a Nazi cultural bureau and a medical organization, were also formed. The Shanghai SA, a uniformed body, had about 100 members who occupied themselves in guarding the German radio station and other institutions and in intimidating local non-Nazi Germans.
The Shanghai Germans included a few non-Nazis, among them Pastor Fritz Maas of the Evangelical Lutheran church, who was dismissed for administering sacraments to ‘non-Aryan’ German refugees. With the outbreak of the war in Europe, German businessmen in Shanghai, most of whom had hitherto been lukewarm towards Nazism, found that party membership was an essential prerequisite to the securing of German government contracts. After September 1939 German, like British, firms in Shanghai enjoyed a tremendous boom as a result of government purchase orders. Under Nazi pressure, companies such as Agfa and I. G. Farben dismissed Jewish employees from their Shanghai offices and adjusted their policies to meet the national interest – or at any rate the Nazi interest.7
The Nazi leader in China, Siegfried Lahrmann, was a former commercial clerk who had joined the party in 1931 and secured the sinecure position of ‘Director of German State Railways, China Branch’. He was a heavily-built, ruddy-faced man with a large belly, whom a German diplomat recalled as looking ‘a bit brutal’.8 Lahrmann was recognized as Landesgruppenleiter for the whole of China. He intrigued against non-Nazi German diplomats, among them Consul-General Martin Fischer, whom he accused of lacking the ‘Hitler spirit’. But Lahrmann himself faced opposition from more extreme Nazis who considered him unqualified for leadership.9
While both the consulate-general and the Nazi party maintained intelligence sections of their own, the most important German intelligence organ in the city was the local branch of the Abwehr, the main foreign espionage organization of the armed forces, headed by Admiral Canaris. The Shanghai office was established by Captain Louis Theodor Siefken. A stout, broad-shouldered man in his mid-40s, he arrived in Shanghai in August 1940. After serving in the German air force in the First World War, Siefken had worked for Junkers Airways and for various shipping firms in foreign countries. In June 1940 he was recalled to Berlin and assigned to the Abwehr where he was trained ‘in codes, use of secret inks, and micro-photography’.10 He was nominally assigned to the German Consulate-General in Shanghai as a ‘commercial adviser’, but he acted directly under the orders of the naval intelligence section of the Abwehr in Berlin. In communications with Berlin he generally used the cover name ‘Smith’.
The chief task of Siefken’s office was to provide Berlin with information on ships’ movements throughout the Pacific region. In particular, he sought information that would be useful for German raiders in attacks on Allied shipping. The bureau also acted as a central post office for reports received in drop boxes in Shanghai from the Philippines, South America and other places. Agents’ reports, often in the form of microdots, were placed in these boxes in envelopes which Siefken then forwarded to Berlin; according to his own account he was often unaware of their contents. His staff took photographs of Allied ships in Shanghai. They prepared photostats of navigation charts. Local agents picked up gossip and secured information on the location of minefields in Hong Kong and Singapore harbours. German shipping firms such as Melchers & Co. and the Hamburg-Amerika Line donated facilities and expertise to Siefken’s organization. Under his direct control a network of agents and sub-agents was established in other places, including Tientsin, Peking and Bangkok. In addition to the collection of data on the Allies, Siefken’s office also assembled delicate information concerning Germany’s ally, Japan. Of special interest to Berlin were reports on suspected deliveries of war materials by the Japanese to the Russians.
Most importantly, Siefken established a wireless listening team for the interception and decoding of ships’ messages. The team worked in cooperation with Italian radio experts. German shipping firms in Shanghai were ordered to help in setting up the organization and a front company, known as ‘Astra Electrical Appliances’ was formed, with an office on the corner of Kiangsi and Kiukiang Roads. As the radio work grew, it became necessary to rent a house on Columbia Road and the German and Italian experts consolidated their activities there.
One of the Abwehr’s most effective agents in Shanghai was Carl Jochheim, described in a German intelligence report as an international swindler and ex-convict who had been accused of stealing aluminium ingots from the Swiss Aluminium Rolling Mill in Shanghai. The Germans, like the Japanese, had little compunction about making use of men with criminal backgrounds. When Jochheim’s history was brought to the attention of the German naval attaché in Tokyo, he recorded in his diary that he did ‘not take it too much to heart’:
I myself have long been under the impression that Jochheim has an adventurous kind of character. Such characteristics should not matter particularly if we weigh his past against his potential for acquiring useful intelligence. People employed in the secret intelligence service are often, even if not predominantly, of such a kind. So far, Jochheim has proved to be extremely useful in picking up information.11
Siefken employed a number of such agents, generally for low-grade assignments such as watching ships’ movements on the river or chatting up sailors in bars.
The Siefken bureau followed standard Abwehr regulations that forbade any open connection with the Nazi party. The rule was strictly observed by the Shanghai office, except that ‘for health reasons’ they were allowed to belong to the SA sports section.12 Siefken travelled a great deal to Nanking, Tientsin, Peking and Tokyo, so much so that one of his subordinates complained that he was able to see him only three or four times a year. All this activity yielded a stream of intelligence that was relayed to Berlin. Much of this was of only marginal value but on at least one occasion the results were spectacular.
In November 1940, German signals intelligence achieved a notable coup when a German commerce raider, Atlantis, captured the British Blue Funnel liner Automedon off Singapore. The ship, which had been converted into a frozen meat and stores carrier, was sailing from Liverpool to Hong Kong and Shanghai. On 11 November, when she was about 250 miles south-west of Sumatra, she came under attack. The vessel was rocked by explosions and the master was killed immediately. The surviving senior officer rushed to the captain’s cabin which had been ‘reduced to a shambles’ and struggled desperately to find the key to the strong room where secret mail was held. He failed. The captors subsequently discovered a treasure trove of confidential official communications, including secret codes and correspondence destined for various British military and intelligence offices in the Far East. Among these was mail addressed to the Secret Intelligence Service station in Shanghai.13 The delighted German naval attaché in Tokyo declared that the captured documents ‘exceeded our highest expectations’.14
From the outset of his activities, Siefken encountered what he regarded as obstruction from the consulate and embassy officials in Shanghai. There existed almost congenital suspicion between the diplomats and security personnel. Friction arose particularly from the fact that Siefken, as an employee of the German general staff, was allowed to use his own code in communications with Berlin. His messages were thus indecipherable by the consular officials. Partly because of such tensions, the Siefken bureau’s headquarters were moved from the German consulate building to the fifth floor of the Defag (Deutsche Farben-Handelsgesellschaft Waibel & Co., a subsidiary of the giant industrial trust I. G. Farben) building at 261 Szechwan Road.
Siefken’s difficulties were compounded by the existence of a separate and rival German secret organization: the local branch of the Gestapo headed by Gerhard Kahner, a malevolent ruffian whose behaviour earned him a reputation for domineering brutality. The secretary of the German embassy in Tokyo considered him dishonest and a liar, ‘sexually dissatisfied’, and with an ‘inclination to sadism’, though he added that Kahner took a ‘strong stand for Germany’.15
Kahner arrived in Shanghai in 1940, charged with the tasks of observing Jewish emigrants in the city and conducting counter-espionage against the British intelligence apparatus there. His installation in Shanghai had evoked a protest from Consul-General Fischer, who argued that the first sphere was already covered by the consulate. The SS chief, Heinrich Himmler, insisted that Kahner’s work necessarily included investigation of Jewish emigrants. At the same time, he proposed that, as a cover, Kahner be attached to the embassy press office.16 Fischer reluctantly consented but, in a private comment for the eyes of the Foreign Ministry only, he pointed out that the proposed arrangement would have the advantage that Kahner would fall under diplomatic authority, which would facilitate the ‘supervision’ of his activities.17 The remark was diplomatically omitted from the version of Fischer’s message that was forwarded by the German Foreign Office to Kahner’s superior, Oberführer Müller, a senior SS official.18
A post-war report on Kahner’s activities as Gestapo chief in Shanghai noted that several Germans in the city “‘who were not satisfied with the way things were going” simply “disappeared” and later their bodies were found floating in the Whangpoo River. The rest of the German community believed – not without reason – that Kahner had had them kidnapped and killed.’19
Although the Germans built up a substantial undercover apparatus in Shanghai, they remained hamstrung by the fact that since the First World War they had been denied the right to station troops or naval units there. When Britain declared war on Germany on 3 September 1939, there were still 1,496 British regular troops and 1,234 US marines in Shanghai, as well as over 4,000 British and American troops stationed elsewhere in China. There were also 1,714 French troops (mainly Annamites) and 214 Italian marines in the city.20 Yet in spite of the war against Germany in Europe, the dominant note in British and French policy in the Far East continued to be one of appeasement. The need to concentrate resources in Europe made the Allies all the more anxious to make almost any concession in order to prevent the Japanese entering the war on the side of Germany. Japan had already signed a five-year Anti-Comintern Pact with Germany in 1936 and the British had no desire to afford her any ground for moving into a still closer alignment with the Nazi régime.
Major British enterprises accordingly received official guidance to apply the Trading with the Enemy Regulations very flexibly in Shanghai ‘so as to give the Germans as little handle as possible for enlisting Japanese sympathy or support against us’ – as a report for Butterfield & Swire put it. The same report added: ‘Our instructions are to complete all contracts already entered into with Germans, to pay debts due to them before the outbreak of war, to deliver cargo held in German names prior to the outbreak of war, and generally to round off all existing engagements but not to enter into new ones.’21
Having already concluded that the settlement was militarily indefensible, the British now took an explicit decision not to resist in the event of a Japanese attempt to complete their conquest of the city. In December 1939 the British army commander in Shanghai was instructed that in the event of a Japanese occupation of the settlement, ‘British troops will not resist but will allow themselves to be interned, either by the Americans or the French, preferably the former, since the latter are likely to be involved in operations also.’22 British officials in the Far East did not relish the policy of appeasing Japan but could do nothing about it. ‘It has been a jolly humiliating mission, my time in Tokyo’, Sir Robert Craigie, the British ambassador to Japan, confessed in September 1940 at a garden party given at the British ambassador’s residence in Peking. Pronouncing himself ‘nauseated with being polite to the little blighters’, Craigie declared, ‘Once we have Hitler trounced we will drive the Nips back to where they belong.’23
Against this background, the Japanese had only to push, by gentle and not so gentle means, for the whole Anglo-American house of cards in the settlement to totter. The pressure came at the weakest point – the Western Extension Roads area. The ominous prospect was described by the Swire representative on 15 September 1939:
The Japanese have lost no time in starting an attempt to exploit the preoccupation of the Western Powers. During the past ten days armed Ta Tao [puppet] police have been entering the Western Outside Roads Area in large numbers and they have commenced patrolling the Council’s roads, building sandbag posts etc., and generally displaying a most truculent attitude. In the meantime, the Council has been inundated with reports from reliable sources that the Japanese military have the bit in their teeth and are determined to secure full control over this area, including the roads. …Godfrey Phillips, the Municipal Council Secretary and Commissioner General … reported … to a meeting consisting of the British Ambassador, the American Consul-General, Major-General Simmonds [the senior British military officer in Shanghai], and representative members of the Council, to the effect that he was convinced that we should be faced by a forceful attempt to oust our police and gain control of the area unless we were willing to negotiate immediately, and this meeting reached the unanimous conclusion that, in the new circumstances created by the European war, there is no alternative but to try to come to some sort of an arrangement.24
Negotiations began immediately but soon bogged down on the stipulation by the Chinese puppet régime that its police be given full control of the whole Western Roads area.25
No doubt as a stimulant to these discussions, the Japanese began applying pressure by violent means. On 22 September the Swire representative noted that ‘Ta Tao [Chinese puppet] police recently drafted into the area are displaying increasing truculence, and several of the Council’s Chinese and Sikh police have been disarmed by strong gangs of Ta Tao people dressed as civilians.’26 A month later he reported ‘two nasty shooting incidents’ in the area, one of which amounted to ‘a small pitched battle in Jessfield Road, involving the throwing of hand-grenades and the use of Thomson guns’. In the face of such violence the Municipal Police abandoned some of their posts in the area and reduced their profile. The British military commander refused to assist the Municipal Police in reclaiming their positions ‘because it was feared that this might be provocative and involve a clash with the Japanese Gendarmerie’. As for the Municipal Police commanders, they worried that their Chinese subordinates, ‘already rather demoralized by weeks of playing second fiddle to the Ta Tao people’, might refuse duty in the area. They could hardly be blamed for this, commented the Swire representative, ‘as no one can reasonably be expected to relish the job of standing in the middle of the road to be shot at by any passing gangster’. Anglo-American dissension did not help matters:
The Americans [the Swire report continued] characteristically continue to talk big but act small; they press for firm action by the Council and the British Military, but decline to send a man into the area to help, though they are now talking about sending some Marines to protect American lives and property, which would doubtless mean putting their men on specific American properties, and would not serve to give the general support to the Council’s police which is so badly needed.
Not surprisingly, the Municipal Council was said to be ‘virtually distraught in its efforts to find a solution to the problem other than withdrawal from the area’.27
Dissatisfied with the pace of the talks, the Japanese resorted to even more direct methods. On 6 January 1940 an unsuccessful assassination attempt by six men armed with pistols was made on Godfrey Phillips as he was driving along the Avenue Haig on his way to work at the Municipal Council offices. ‘Discreet enquiries’ by Detective Inspector Crawford of the Municipal Police disclosed that the crime ‘was instigated by Wang Ching-wei’s party and the Japanese Military Police’. Three of the would-be assassins were traced to the Intelligence Section of the Japanese Military Police while another three were Chinese puppet ‘Special Service Corps’. The Japanese had fired on Phillips while their Chinese coadjutors had kept watch. Inspector Crawford reported that after the attack the three Japanese had run into an alleyway:
but were halted by the armed guards of the Sun Sun Gambling Den, no. 30 Tsu Ka So, who mistook them for armed robbers. They told the armed guards that they came from ‘Kung Kwan’ (a courtesy name for the residence of a high class Chinese and here indicating 76 Jessfield Road) and were handed over to the … Special Service Corps … The three were later transported to 76 Jessfield Road, the headquarters of the Special Service Corps, and thence taken away by the Japanese Gendarmerie. It is reported that they are at present detained at 94 Jessfield Road, the premises of the Western District Section of the Japanese Military Police, who are stated to have demanded a statement from them as to why they failed in their mission after coming so close to their object.
Crawford surmised that the purpose of the attack had been threefold: first, to prevent the conclusion of an agreement over the policing of the Western Roads; second, to bring about the replacement of the puppet mayor of the Chinese municipality; third:
and the most important reason – after the assassination which was expected to be successful, to lay the blame on the Chungking Government by fostering propaganda to the effect that the case was perpetrated by agents of [the] Chungking Government on account of Mr Phillips’ attempt to conclude an agreement with the puppet régime which is opposed to [the] Chungking Government and which is not recognized by foreign powers. By means of such propaganda it was expected that [the] sympathy of the foreign community, at least a section of it, would turn from the Chungking Government towards Wang Ching Wei.28
As the British and French position in the Far East weakened, law and order in the Western Roads area continued to deteriorate. In February 1940 a French police report stated:
the audacity of the bandits no longer knows any limits. They attack foreigners and Chinese alike in full daylight, even in the most frequented streets in the vicinity of the ‘badlands’ to which they flee after their attacks. Sixty percent of all armed robberies in the Settlement are committed in the immediate vicinity of the ‘badlands’.
The same report estimated that the proprietors of gaming establishments in the area were paying more than $1 million a month in ‘squeeze’ to the Japanese.29
In the meantime the gambling operators and their Japanese patrons had extended their area of operations, thanks to an agreement mediated in December 1939 by the French lawyer Auxion de Ruffe. A deal was struck whereby the Japanese agreed to open the gates between the concession and the old Chinese district, Nantao, to permit the quarter’s former residents to return. As a kind of quid pro quo, a group of Chinese gambling promoters was granted a licence to operate a large gambling house in Nantao.30 Father Jacquinot’s ‘Refugee Safety Zone’ in Nantao was dissolved in June 1940; its remaining 19,000 residents were given a month’s supply of victuals and left to fend for themselves.
A modus vivendi on the policing of the Western Roads area was reached between the Shanghai Municipal Council and the Japanese-controlled Chinese municipality on 16 February 1940, but it was not until the following December that the two sides finally settled on regulations for implementing the agreement. These provided for the creation of a new body, to be known as the Western Shanghai Area Special Police Force, which would have charge of the entire Western Extension Roads area. The force would be composed partly of officers nominated by the Municipal Police and partly of nominees of the (Japanese-sponsored) Chinese municipality’s police and would operate under the aegis of the puppet municipality. The settlement authorities were far from happy with the arrangement but, as Phillips told the British consul-general, the deal was ‘as satisfactory as can be obtained by negotiation with the (puppet) Special City Government in existing circumstances’.31 Further wrangling delayed the establishment of the new force until 15 March 1941.
Although the British gave way on this point and also yielded to demands for an increase in the number of Japanese officers in the Municipal Police, they were determined at all costs to maintain control over the Municipal Police Special Branch because of its role in intelligence-gathering. The department’s former concentration on tracking communists had by now been replaced by broader preoccupations.
In December 1939, for example, a Special Branch report was submitted on ‘certain activities’ at an office building at 17 Foochow Road, following a complaint from the executive manager of William Hunt & Co. Steamship Corporation which owned the building. The manager expressed suspicion that the office block ‘had been taken over by pro-Japanese elements’. One of the sub-tenants in the building was a pro-Wang-Ching-wei Chinese newspaper owned by A. M. Kiehn, an American ‘well known in Shanghai for his attempts to pass bad cheques’. Kiehn was also known to be a Japanese agent and had recently returned from a visit to Japan. Nothing untoward could be discovered by the Settlement police at 17 Foochow Road, but shortly afterwards the concession police obtained evidence suggesting that William Hunt & Co. themselves were engaged in questionable dealings and might be trying to throw smoke in the eyes of investigators. From the inquiries of the French police it emerged that the enterprise was American in name only. In reality it was a front for the interests of the China Merchant Steam Navigation Company, controlled by the Chungking government. In order to prevent the Japanese from seizing their property at the time of the occupation of Chinese Shanghai in 1937, the owners had transferred nominal control to William Hunt, a former American vice-consul at Tientsin who had had to resign from his consular position in 1927 as a result of a financial scandal. Behind the ‘double control’ of the Chinese shipping interests, it appeared that ‘certain Chinese enterprises were … in close contact with German houses’. The French police concluded that Hunt, who was ‘in close contact with certain high officials of the Chungking Government’, was ‘utiliz[ing] the neutral status of his house to “favour” the despatch into “Free China”, via Indo-China, of German merchandise ordered by Chinese firms controlled by him or his Chinese friends’.32 Such complex multinational business manoeuvres, for which the settlement was the perfect setting, rendered ineffective Anglo-French efforts to enforce the trading blockade against Germany.
As this episode illustrates, the French police cooperated with the British on political cases in the period from the outbreak of the war to the fall of France in June 1940. This was a break with past practice. With the exception of the First World War period, the two neighbouring police authorities had frequently behaved more like enemies than allies. While there was some exchange of information on routine criminal matters, coordination in political cases was much less common. The French police were, in any case, regarded with disdain and suspicion by the British on account of their notorious susceptibility to ‘squeeze’ and their old association with gangsters such as the former Green Gang boss, Tu Yueh-sheng.
Given the impossibility, as it seemed, of combating the enemy by force of arms or even by economic warfare, the British and French were reduced to one weapon: words. In Shanghai, as in Europe, the phony war was more a matter of gestures and propaganda than of fighting. Its main battlefields, apart from flagpoles, were newsprint and the airwaves. The British and American press in Shanghai before the war had enjoyed a high reputation. Among the four English-language dailies, the North China Daily News, known as ‘the Old Lady of the Bund’, held an unquestioned primacy. The foremost British newspaper in the Far East and the oldest in any language in China, it was a kind of Far Eastern equivalent of The Times of London. The paper represented British business interests and for much of its history faithfully reflected the thought processes of the ‘Shanghai mind’. It had a circulation of about 10,000. Much less influential was the Shanghai Times, which sold between 6,000–7,000 copies. Since 1915 it had belonged to an Englishman, E. A. Nottingham. In 1924, he had fallen into financial difficulties. After appealing for help in vain to a number of British banks, he turned to the Yokohama Specie Bank which not only advanced him the required sum but arranged a subvention by the Japanese government. Thenceforth the paper pursued a barely-disguised pro-Japanese line. In the years 1939–41 it gave patriotic support to the British war effort against Germany while urging a conciliatory attitude towards Japan. By contrast, the Shanghai Evening Post and Mercury, a lively, American-owned popular paper, was strongly anti-Japanese. The China Press, although nominally an American company, was in reality owned by interests close to Dr H. H. Kung, a senior Chinese nationalist politician. It hewed a pro-Kuomintang line – and consequently suffered frequent bomb attacks.
Some Anglo-Saxon journalists were well known public figures. Two, in particular, were thorns in the flesh of the Japanese: J. B. Powell, editor of the China Weekly Review, an American who received an indirect subsidy from the Chinese nationalists in the form of bulk subscription orders for his journal; and H. G. W. Woodhead, a British citizen, who was editor of Oriental Affairs and also wrote a regular column in the Evening Post and Mercury. Both wrote vigorous denunciations of Japanese aggression in China; both were to suffer terribly as a result.
In July 1940 puppet organs published a ‘blacklist’ of seven foreign and 87 Chinese journalists, all of whom were targeted for assassination. The foreigners included Cornelius V. Starr and Randall Gould, respectively proprietor and editor of the Shanghai Evening Post and Mercury, J. B. Powell and Norwood F. Allman, an American lawyer who was the registered owner of a pro-Kuomintang Chinese newspaper. Allman was a leading figure in settlement politics and business life. In addition to his legal duties and his management of the Chinese Shun Pao newspaper, he also served as honorary Mexican consul, ran a paper mill, was director of a cinema chain, commanded the American company of the Shanghai Volunteer Corps and served as a member of the Municipal Council. Few of the blacklisted men were intimidated by death threats though most took defensive precautions.
The foreign community was also served by a number of papers in other languages. The Journal de Shanghai, edited by Jean Fontanel, had a circulation of a little over 2,000 and received a substantial annual subsidy from the French consulate-general. In 1936 the local Shanghai German newspaper, Deutsche Shanghai Zeitung, was taken over by the Nazi party and renamed Ostasiatischer Lloyd (the title of an older, defunct German paper). Although purporting to be still independent, the paper became the leading organ of Nazi propaganda in the Far East under the editorial control of Dr Horst Ley, a long-time and faithful Nazi.
The Lloyd’s donkey-like adherence to the party line involved a painful sacrifice of potential revenues: it was compelled to refuse not only advertisements from the large German-Jewish refugee population in Shanghai but also announcements from the German Evangelical Church which, in its local manifestation, was deemed politically unreliable. In the winter of 1940–41 Ley agreed, at a meeting with the German consul-general, Martin Fischer, and A. Henschel, Landesgruppenleiter of the Nazi Foreign Organization in Shanghai, that the paper would henceforth exercise strict control over the acceptance of advertisements. When Ley nevertheless printed two pages of church announcements, Henschel issued a peremptory order to the German press attaché insisting that henceforth the paper must not accept any more announcements from the church.33 The exasperated Ley pointed out that it was well-nigh impossible to check the ‘Aryan’ credentials of every person who bought a small classified advertisement. The paper’s staff, he claimed, had in fact tried to carry out such checks but when a Chinese clerk presumed to question the racial antecedents of customers, the procedure had been considered ‘an offensive impertinence’. Ley’s protest led Henschel to accuse him menacingly of ‘un-National-Socialist conduct’.34 Such squabbles notwithstanding, the Lloyd generally served the Nazi cause with unswerving faith. For a time the Lloyd also put out an English-language paper, Noon Extra. A more openly Nazi publication, Ostasiatischer Beobachter, appeared monthly under the editorship of S. Lahrmann, head of the Nazi party in China, but its indigestible ideological diatribes were attractive only to hard-core fanatics.
Whereas the pro-Nazi German press in Shanghai could survive only with official backing, the German-Jewish émigré press, which had a much larger potential audience, flourished without subsidies – to the great annoyance of the local German authorities. By 1940 there were 17 Jewish periodicals in Shanghai, including two daily newspapers: the Shanghai Jewish Chronicle (circulation around 3,000), edited by a Polish Jew, Ossi Lewin, and the Gelbe Post (circulation around 2,000), edited by A. J. Storfer.35 The German consulate-general took legal advice when one paper called Hitler ‘Germany’s hangman’, suggested that Rudolf Hess was a ‘Hamitic crossbreed’ and printed other disobliging comments on Nazi leaders. But since the Municipal Police’s censorship apparatus was effectively under British control, such attacks could not be prevented from appearing.36 Some prominent local Jewish journalists were deprived of their German nationality – but this sanction had little effect.37
After the outbreak of the European war, the German government decided to enhance its propaganda effort in Shanghai. A big well-financed press bureau was established on the sixteenth floor of the Park Hotel. Headed by Baron Jesco von Puttkamer, it operated under Goebbels’s Propaganda Ministry and worked in cooperation with the local branch of the Nazi party. An animated, bespectacled, middle-aged man, Puttkamer was described as ‘of the old-fashioned Junker type’.38 His father had been a major-general, his mother a romantic novelist. Puttkamer had joined the Nazi party at an early stage, attracted by its violent nationalism. He was the author of a number of books of xenophobic inspiration, among them Wahr bleibt Wahr: deutsch die Saar! (1934). He also wrote articles for the Nazi press. He left his wife and children behind in Germany but, as a post-war US intelligence report put it, ‘had a girl secretary and travelling companion who kept him happy in China’.39
Under Puttkamer’s direction, Shanghai became the centre of the German propaganda effort for much of the Far East: material was sent not only throughout China but to the Philippines, the Dutch East Indies – and even to North and South America and Europe, since mail from China was not strictly censored when arriving in neutral countries.40
The Allies soon noted with concern the heightened effectiveness of German propaganda in the region. In February 1940 a British intelligence report stated that the German Trans-Ocean agency was supplying 100–200 pictures a month in Shanghai as against a dozen or so made available by the British Ministry of Information. The result was that even Russian newspapers that were ‘pro-Allied in tone’ were compelled to rely on these free German photographs.41 By contrast, some Allied propaganda did not produce the desired effect. For example, when the violently anti-Nazi film Confessions of a Nazi Spy was shown to packed houses at the Astor Cinema in the concession in May 1940, a British intelligence report noted that Chinese spectators who did not understand the dialogue ‘were merely impressed with the display of massed German troops goose-stepping into Czechoslovakia’.42 The Allied counter-propaganda effort was jeopardized by German penetration of the office of the British press attaché in Shanghai – though the Nazis seem not to have utilized this source effectively.43
At first the Allies enjoyed greater fortune in the war over the airwaves. Shanghai’s 40 or so radio stations, some of them very powerful, broadcast in many languages to the entire region. In addition to the large number of Chinese transmitters, most of the major European languages and ideologies were represented. Each of the major powers had its own broadcasting station: for example, XQHA (Japanese), FFZ (French), XIRS (Italian) and XRVN (Russia). The main pro-Allied ones were the British-owned XMHA and XCDN, the broadcasting arm of the North China Daily News. Typical of the output of these stations were such programmes as the BBC serial play Shadow of the Swastika (broadcast in January 1941), a talk by the journalist Stefan Lorant entitled ‘I Was Hitler’s Prisoner’ (February 1941) and recordings of speeches by Winston Churchill.
Probably the most effective English-language broadcaster in the Far East at this period was the American journalist Carroll Alcott. A British intelligence report called him ‘our most useful propagandist in Shanghai’.44 His talks on XMHA angered the Japanese to such an extent that they used naval wireless equipment to try to jam them. The ‘bulldog-voiced but softhearted’ Alcott was repeatedly threatened and lived in constant fear of kidnapping or assassination.45 Suspecting that he had been ‘fingered’ for treatment by Captain Pick’s ‘hit-man’, Nathan Rabin, Alcott hired a bodyguard, wore a bullet-proof vest and avoided entering public places other than the foreign clubs.46 Perhaps because of these precautions the attack never came.
The German counter-offensive in the radio war was at first rather ineffectual. Before 1939 the Germans had had only a minor presence on the Shanghai airwaves and at the outbreak of the European war they were compelled to stop broadcasting ‘German hours’ from a station in the concession. The Japanese then placed at their disposal a first-class transmitter with comfortable studio facilities attached. But this was also a Japanese military transmitter and since the Germans were still formally neutral in the Sino-Japanese conflict they felt obliged to decline the offer. For a while they rented a local Chinese station which broadcast news and commentaries in German and English. But a British intelligence report in the spring of 1940 noted that station XHHB’s ‘libellous’ anti-British propaganda was not very successful:
The tone of the news comments is vituperative but not very imaginative. The propaganda talk is presented with a sort of bespectacled German earnestness, and the obviously thought-up comments on the local British press are no match for the apparently artless humour of Carroll Alcott.47
After a time, however, the Germans improved the technical quality of their broadcast propaganda effort and eventually built up an impressive wireless establishment in Shanghai.
German radio propaganda came into its own with the opening of a new station, XGRS, with the most powerful transmitters in the Far East. Situated near the Kaiser Wilhelm School on the Great Western Road, this was initially a medium- and long-wave station only, but early in 1941 it started short-wave transmissions which made it audible throughout much of the East Asian region. The manager of the station, Carl Flick-Steger, was a German-American who had studied at Brown University in Rhode Island and worked for several years for the Hearst newspapers as a correspondent in Berlin and Vienna. After a spell as Hearst correspondent in Shanghai, he took up his position at XGRS in December 1940, renouncing his American citizenship at the outbreak of the Pacific War. The station’s staff included other Americans: Robert Fockler , a former trombone player who had headed the band at ‘Demon’ Hyde’s Del Monte café, and Val Honeycutt, divorced wife of an American sailor. Unlike most German radio stations abroad, XGRS was not run by Goebbels’s Propaganda Ministry but was under the authority of the Foreign Ministry. Flick-Steger called it ‘Ribbentrop’s personal baby’.48 The British succeeded for a while in hampering XGRS by secretly blocking its requests for increased power from the American-owned Shanghai Power Company.49 But the delicacy of Britain’s strategic and diplomatic position in the Far East in general, and in Shanghai in particular, precluded more public or forceful counter-measures.
By far the most intellectually impressive and polished propaganda vehicle in any language produced in Shanghai during the war was the German-controlled English-language literary and political monthly XX Century. This journal, produced from October 1941 until the summer of 1945, was funded by the propaganda section of the German Foreign Ministry. Its editor, Klaus Mehnert, became a well-known personality in wartime Shanghai.
Born in Moscow in 1906 of German parentage, Mehnert was a relative of the German ambassador in Tokyo, Eugen Ott. Mehnert studied at various German universities and was awarded a Ph.D. in Berlin in 1930. He also spent a year as an exchange student at the University of California at Berkeley where he married an American co-ed. After working for two years as a German foreign correspondent in Moscow, he moved to Honolulu where he taught from 1938 to 1941 at the University of Hawaii. An ambitious, energetic, intelligent and gregarious man, with glasses and large, protruding ears, Mehnert was a popular figure in pro-Axis café society in Shanghai. At the same time he did not inspire trust. A post-war acquaintance said of him that he knew ‘how to skirt the truth and make it look like truth’.50
According to Mehnert’s post-war account, in a memorandum submitted to US Army Intelligence, he was recommended for the job in Shanghai by the diplomat Adam von Trott zu Solz who was an old friend.51 Trott, a leading figure in the German resistance, was executed in 1944 for his participation in the July plot against Hitler. Mehnert’s claim may well have been a self-serving attempt at exculpation. As editor of XX Century, he was paid the high salary of RM2,000 per month – in his memoirs, published in 1981, he recalled that when offered this amount he was unsure whether it was per month or per year.52 But Mehnert may have been colouring the truth on this point too. A post-war American intelligence report stated that he had been paid the regal amount of RM5,000 per month for the first three months and RM3,000 thereafter. Whatever the salary, he had no compunction about accepting it.
Upon Mehnert’s arrival in Shanghai in July 1941, the Municipal Police Special Branch instituted a watch on him. They reported that he was ‘an enthusiastic Nazi’ (contrary to Mehnert’s post-war claims that he was lukewarm in his allegiance). His projected magazine, the police report continued, ‘is being financed, according to reliable information, by Nazi funds, the real aims of the publication being closely connected with pro-Nazi and anti-Allied propaganda’.53 Over the next four years Mehnert steered his publication cunningly along a sophisticated path that eschewed overt pro-Axis advocacy. XX Century attracted a wide range of contributors, few of whom were publicly identified with Nazism. Thanks to its official subsidy, the magazine cost very little and although it had only 3,500 subscribers was considered one of the most influential propaganda outlets in the Far East. A post-war American intelligence appreciation called the magazine ‘one of the slickest bits of propaganda work that has been done anywhere’.54
Among Mehnert’s contributors was Hilaire du Berrier. The retired aviator plainly felt a certain awkwardness in associating with the Nazi journalist, but he explained the connection away happily enough in a letter to his sister in September 1941:
Much to my embarrassment, between the time when I agreed to write them a short article and the time when the magazine came out with said article in it, Axis money exerted pressure on Dr Mehnert (and perhaps a threat or too [sic]) so that when it came out I suddenly found it had swung from a 100% neutral, cultural, far-eastern journal to an Axis propaganda sheet, with me sharing honors in it alongside the former German ambassador to China and the Italian military attaché to Nanking. Too bad too. Not only for the chagrin this first issue is going to cause me, but Mehnert had given me carte-blanche to write a short thing a month for him, any subject I wished to cho[o]se – with $600 (Chinese money) on delivery. Now I fear I shall have to drop him. He’s a nice fellow … He is not Nazi so he hoped to make a living for himself in Shanghai with this magazine, thought he could keep it neutral. I told him it was impossible: Gestapo would shake the club over him if he didn’t swing with them, the allies would force him out of publication if he didn’t swing their way, but he determined to try. It seems I was right.55
Although this letter shows that Berrier was aware of the magazine’s real backers, he did not drop Mehnert and, in fact, continued to contribute to the journal.
Meanwhile, things had been looking up for Berrier on another level. He had made the acquaintance of an interesting young woman, Rosalynd Kadoorie. For a fortune-hunting wastrel whose funds were running low, she was a wonderful catch. Her family were part of the old-established Baghdadi Jewish merchant community in Shanghai and were fabulously wealthy. The attachment prospered and Berrier boasted to his sister that he and Rosalynd were engaged to be married.
The start of the European war, however, led to an abrupt change in Berrier’s plans. He wrote to his sister announcing that he had volunteered for the French army and would shortly sail from Shanghai. ‘Too bad! I was coming along well with my writing, had taken a new apartment and was going to marry Rosal[y]nd this month. She is upset about it and the General I have been working for is annoyed, as I was under a contract with him.’56 The French, however, took their time in mobilizing him. In May 1940 he was still in Shanghai and advised his sister:
In case you should get a cable from me stating that I have left China for points West … you can always write Rosa … her address is: Mlle Rosalynd Kadoorie, 8 Edinburgh Road, Shanghai. Yes, Rosa and I are still as one. She is a great girl and more fun than a circus … Rosa is a scream, full of all the supersticion [sic] of the Orient, and at regular intervals when the family ghosts, pursued by wild or homeless spirits, come back for a meal or a night’s frolic in the old home, Rosa sees them and can’t sleep for nights.57
In the summer of 1940 Berrier’s apparent readiness to serve the Allied cause was overtaken by events: ‘France collapsed while preparations were being made to take over a command in Somaliland’, he later explained to his sister.58 In July that year Berrier volunteered for the British forces but was rejected.59 Shortly afterwards the Municipal Police reported that Berrier had recently attempted to steal some documents from a room at the Park Hotel occupied by Chiang Kai-shek’s German former bodyguard, Captain Walter Stennes, but had been caught in the act.* Stennes kept the matter quiet but Berrier was said to be ‘afraid that he may yet suffer in some way for his temerity’.61
The same report noted a change in Berrier’s social life. The vivacious Rosalynd Kadoorie seemed to have been forgotten, for Berrier was now ‘co-habiting with a Mrs Oleaga who was formerly Mrs Burkhardt’.62 Evelyn Oleaga had been born to British parents named Buchan. Her first marriage had been to a Swiss national, G. J. Burkhardt, a partner in the British firm Burkhardt, Buchan & Co. According to a Municipal Police Special Branch report, this firm had been closely connected with the local branch of a Soviet trading company ‘and was also known to have been financed by funds from Moscow’. The Soviets were said to use the firm to conduct business ‘when it was not convenient for a Soviet concern to act directly’. In 1933 Burkhardt committed suicide by shooting. Three years later, Burkhardt, Buchan & Co. went into liquidation, ‘the directors owing money widely in Shanghai’. Meanwhile Evelyn had gone to Manila where she married a Spaniard, Francisco Oleaga. Around the time of his marriage, Oleaga abruptly left his job and it subsequently emerged that a large amount of money could not be accounted for.63
Berrier’s motive for moving in on Mrs Oleaga, who was already of a certain age, is suspect. It may be that he was attracted to Evelyn’s daughter, Vicki, who moved in a fast social set in Shanghai expatriate society. But Vicki went off on an extended visit to Hong Kong. When she returned to Shanghai some months later, she followed Berrier’s example and added a spurious handle to her name. Henceforth she styled herself ‘Countess Victoria Lea’. Meanwhile her mother tired of Berrier’s company and was reported to be associating with an Italian officer.64 Mrs Oleaga was regarded by the Municipal Police as ‘politically suspect’. They watched her movements and reported that she ‘attempts to peddle information to various consular authorities in Shanghai’.65
The Special Branch kept Berrier under even closer observation. They ascribed his interest in Mrs Oleaga to squalid mercenary motives:
It is said that he is endeavouring to establish a male brothel somewhere on Avenue Joffre to which rich women will be recommended by Dr von Miorini (Austrian) and Mrs Ruby Edwards and that when the time is ripe du Berrier will attempt to blackmail such women as will appear to be ‘easy’ victims. Du Berrier is stated to be without funds at present and to be subsisting on money provided by Mrs Oleaga.66
What might appear as a joking aside in a letter from Berrier to his sister shortly afterwards provides some confirmation of at least one of these extraordinary charges:
Husbands are running wild these days since their families left Shanghai. You know, Shanghai’s Russian girls are famous the world over. For years they have huddled dejectedly in Shanghai night clubs all the way from Blood Alley to Hungjau, fighting over any lonely males that come their way like lions over a lost straggler – always hungry, broke, tired, homeless. Now all of them have homes and none of them are hungry. Like Mercury, the messenger of the Gods, I propose to live the rest of my life on blackmail …67
As this letter half-indicated, Berrier had plunged deep into a moral abyss.
‘Count’ du Berrier, Evelyn Oleaga, her daughter ‘Countess’ Victoria Lea, Dr von Miorini and Ruby Edwards all formed part of a meretriciously smart, if dangerous, circle in which lack of respectability was redeemed by liberal spending of large amounts of (sometimes non-existent) money, in which life histories and titles were fabricated, and political and sexual loyalties were commodities for sale to the highest bidder. The broadening of the international conflict in the course of 1940 and 1941 soon offered this set and their ilk scope for profitable speculation.
After France fell in June 1940, its empire in the Far East crumbled to dust. Indo-China was swallowed up by the Japanese ‘Co-Prosperity Sphere’, although the French were permitted to save a measure of spurious dignity by continuing to exercise administrative and police duties in the colony. The United States, increasingly perturbed by Japanese expansionism, reacted by freezing Japanese assets but the move did nothing to moderate Japanese policy. In their concession in Tientsin the French agreed to accept ‘supervision’ over all their activities by Japanese gendarmes. The effects of the catastrophe in France were soon felt in Shanghai too. On 25 June the French defence sector next to their concession was handed over to the Japanese and the Wang Ching-wei régime. Then, two days later a Franco-Japanese agreement was signed providing for police collaboration: Chinese political suspects found in the concession would henceforth be handed over to the Japanese.
Some French citizens in Shanghai rallied to de Gaulle; most adopted a wait-and-see attitude; a few identified openly and strongly with the Vichy régime. One who did so with particular gusto was the lawyer Auxion de Ruffe. He was unusual, even among devotees of Marshal Pétain, in acting as a propagandist for the Japanese. In his journal Extrême Orient he repeatedly published articles attacking British and American privileges in Shanghai.68
The French collapse left the British in the Far East, as elsewhere, in something of a quandary how to regard their former allies. The French community in Shanghai ‘needed careful nursing’, wrote a British diplomat in August 1940. ‘The collapse of France rather unhinged them and little [Henri] Cosme, the Ambassador, though he is amiable enough, has neither the character nor the guts to give them the lead that they needed.’ A new French consul-general, Roland de Margerie, arrived in Shanghai in September. He was the former chef de cabinet of Paul Reynaud, the last democratic premier of the Third Republic. The view at the British embassy was that Margerie might ‘not be too much tarred with the Pétain brush’.69 According to later information from the Foreign Office, Margerie had been notably pro-British and ‘all out for the continuation of the war’. But he incurred the enmity of Reynaud’s influential mistress who ‘did her best to get rid of him’. After the armistice, the report continued,
those who were in charge of the French Foreign Office had the decency to try to have the better men who were not in sympathy with the armistice policy sent to posts abroad, so that they would be available to help France again when the time came. Margerie was consequently appointed to Shanghai.
He travelled to China via London and while there considered momentarily ‘throwing his hand in’ – but decided to continue his journey. British diplomats seemed of two minds about him. On the one hand, he seemed to be ‘still an out and outer’. On the other, he was felt to be not altogether trustworthy ‘unless his interests happened to coincide with ours’.70 The German consul-general in Shanghai, Martin Fischer, who got to know Margerie well, later came to similarly ambivalent conclusions, classifying him as an ‘attentiste’.71
British reservations about Margerie turned out to be justified: he served his Vichy masters with unwavering loyalty in Shanghai and was later rewarded with the ambassadorship to China. He struck the authentically confessional Vichy note in a speech delivered at the French community’s New Year celebration in January 1941: ‘In truth we must not hesitate, given the situation, to recognize the facts in all their cruelty, to weigh the consequences of our frailties and our errors. Each of us can be one of the humble artisans of the work of national reconstruction.’72 Margerie’s wife, who came from a prominent banking family, was considered ‘tiresome and a climber’ at the British Foreign Office. While in Shanghai he consoled himself for his political and marital travails by taking as mistress the wife of a local American doctor.73
A test of the attitude of the local French authorities presented itself soon after Margerie’s arrival. From mid-1940 until early 1941 a Free French group in Shanghai, headed by Roderick Egal, a local wine merchant, disseminated Gaullist propaganda and recruited 65 men to fight in de Gaulle’s forces. The recruits included 24 French policemen, among them Robert Jobez, the number two man in the concession’s police force. Initially Egal’s activities were welcomed by the British embassy; a British diplomat considered that he had a ‘brave but not lighthearted optimism and moral courage coupled with a sympathetic understanding of the difficulties of others, which is pretty rare’. The diplomat added: ‘He runs his own show and rightly does not look to us for any direct support for fear of compromising his own position; but he keeps in close touch with us and we help him whenever we can. It would be very difficult to find anyone better suited to this delicate work.’74
These warm feelings were short-lived. Just as his master in London proved to be a tiresome headache to Churchill and Roosevelt, so Egal’s own ‘headstrong behaviour’ came to be considered an embarrassment by some British officials. He was said to have used ‘very violent’ language and the Foreign Office suggested that de Gaulle might be asked to send a message to him urging ‘restraint and forbearance’.75 There was a palpable sense of relief in British official circles in April 1941 when pro-Vichy elements engineered Egal’s arrest on a charge of inciting French sailors to desert. He was removed from Shanghai to Hanoi to await trial. The arrest produced ‘great indignation’ in the French community and a ‘tremendous outburst of pro-De Gaulle sentiment’ manifested itself at the French Club.76 De Gaulle sent a message to Margerie appealing to his sense of honour and asking for Egal to be freed.77 The British eventually secured his release on condition that he furnish an undertaking not to engage in political activities. Although Egal returned to Shanghai briefly the following autumn, he was unable to enter the concession since Margerie telephoned his British counterpart to emphasize that Egal would be deported if he set foot there.78 The British considered threatening, by way of reprisal, to arrest the French consul-general in Hong Kong as well as other pro-Vichy Frenchmen there and in Singapore. But such forceful proposals were soon abandoned as impractical.
Meanwhile the pro-Vichy French ambassador to China, Cosme, issued an order to all French municipal officials and policemen in Shanghai to sign oaths of allegiance to Marshal Pétain. Those who refused to give the pledge would be dismissed. There was no report of any refusal. Although another French businessman took over leadership of the local Gaullists, Free French activity in the city was henceforth more or less snuffed out.
The entry of Italy into the war in June 1940 also had repercussions in Shanghai. US marines had to be redeployed between the Italian and British defence areas in the settlement to prevent untoward incidents between soldiers of the two countries now at war yet strangely still cooperating in the defence of the foreign enclave. The 17,000-ton Italian luxury liner, Conte Verde, which had carried large numbers of German-Jewish refugees to Shanghai over the previous few years, happened to be in port at the time and could not leave for fear of encountering enemy warships. As a result she remained moored in the Whangpoo for the duration.
The desperate military straits in which Britain found herself in the summer of 1940 inevitably impaired her position in the Far East. In July the prime minister, Winston Churchill, announced that the government would be ready to negotiate with the Chinese the abolition of extraterritoriality and the return of concessions – but he added the proviso that such negotiations would take place only when peace had been restored.79 A pamphlet circulated in Shanghai in July 1940 by the ‘Chinese Corps for Riddance of Britains [sic]’ called on the British army and navy ‘to consider the odious situation of your own country’ and recommended: ‘Better withdraw from Shanghai immediately. Otherwise you will involve yourself into annihilation.’80 The ill-meant advice was taken. On 7 August the British cabinet decided to withdraw all British troops from Shanghai, Tientsin and Peking. A ‘most immediate most secret warning order’ was issued to the garrison commanders explaining that the units were to be withdrawn for three reasons:
- They are of little military value.
- The Japanese are out to force a quarrel leading to hostilities.
- Failure to withdraw now might lead to an ultimate withdrawal in humiliating circumstances.81
The decision was implemented on 20 August when the last British troops left Shanghai. Japanese forces took up positions in defence sector ‘D’ (the Western Roads). Their demand for control over sector ‘B’, however, was resisted and responsibility for that area was assumed, for the time being, by the Shanghai Volunteer Corps.
But the settlement’s little army itself was slowly disintegrating. At full strength in October 1937 it had comprised about 2,500 men. By November 1939 it had been reduced to 2,057, of whom 323 were members of the permanent Russian detachment. In 1940 the Municipal Council decided, ‘in the interests of economy’, to incorporate the Russians in the Municipal Police. A small crowd watched the unit’s last ceremonial parade at the Race Course in January 1941.
The fading away of Britain’s token military presence in the city was a green light for Japanese expansionism. Meanwhile, Japan’s decision in September 1940 to throw in her lot with the Axis and sign a tripartite pact with Germany and Italy was soon felt in Shanghai. In November 1940 a senior Japanese officer, Major-General Miura Saburo, spoke semi-publicly about plans for seizure of the international section of the city. In a speech to a Japanese audience at the Concordia Club, Miura disclosed that the settlement would be blockaded whereupon the Municipal Council would be compelled to cooperate unconditionally with the Japanese. Foreigners would thereafter be registered in two classes: 1) enemy belligerents; 2) neutrals and Axis subjects.82
For the time being, the Japanese contented themselves with political pressure. This made sense, as they had good reason to believe that they might gain control of the levers of power in the settlement by constitutional means, relying on their continued growth in numbers. By September 1939 there were 1,827 Japanese qualified to vote in the settlement as against 1,118 British. While the British might generally rely on the 387 Americans voters to side with them, the 419 Germans would be expected to support the Japanese. The 345 Russians might thus hold the balance of voting strength. These figures, as the Swire representative put it, made ‘grim reading’ and British business circles began to fear the worst83
In the Municipal Council election in 1940 the Japanese refused to collude in the traditional gentleman’s agreement whereby seats were, in effect, allocated in advance according to the fixed national quotas. Instead of nominating their customary two members, they put forward five candidates and set about campaigning vigorously for support. With their increased numerical and commercial strength the Japanese had serious hopes of winning all five seats and thus overturning Anglo-Saxon predominance on the council. In response, the British and Americans resorted to what even Caroll Alcott called ‘legal ballot-box stuffing’.84 To counter the Japanese numerical advantage, the large British and American business firms made an organized effort to subdivide their properties into small lots, thereby multiplying their votes. The result of the election on 10 and 11 April was a crushing defeat for the Japanese. The American Norwood Allman headed the poll with 8,000 votes, the largest number ever cast for a candidate in the settlement’s history. Three of the five Japanese candidates were defeated. The resulting council, the last ever elected in the settlement, contained five British, two American and two Japanese members (as well as the five Chinese elected by the Chinese Ratepayers’ Association).
Local Japanese political leaders felt humiliated by this defeat and pondered revenge. An opportunity came at the annual ratepayers’ meeting, held at the racecourse, in January 1941. Among the 2,000 people attending was the 70-year-old chairman of the Japanese Ratepayers’ Association, Hayashi Yukichi. Norwood Allman recalled Hayashi as ‘a nearsighted little man who seemed to be hiding behind his huge, horn-rimmed spectacles’.85 A British intelligence report noted ‘in passing – and without any attempt to be scurrilous – that Hayashi … laid the foundation of his fortunes in running a brothel’.86 He had first come to political prominence at the time of the municipal council election of 1936. On that occasion too the Japanese had failed in an attempt to increase their representation – whereupon Hayashi, at a post-election dinner at the Japanese Club, picked up a knife, slashed his finger and wrote in his own blood: ‘I assume responsibility for what has happened.’87 Afflicted again by a mortified sense of personal responsibility, Hayashi mounted the platform at the ratepayers’ meeting and, ‘in a high Hitler-like voice he harangued in Japanese for almost half an hour’. Shortly afterwards he rose from his seat in the audience, raised a gun and shot W. J. Keswick, the Jardine taipan and new chairman of the municipal council. The Japanese seated around Hayashi ‘rose as one man with shouts of “Banzai! Banzai!”’.88 Keswick suffered only flesh wounds; a Japanese councillor and a Japanese municipal official were also lightly injured. A riot erupted as the infuriated crowd hurled chairs, photographic flashbulbs and wooden boards at the platform. The would-be assassin stood calmly for several minutes after the shooting with his hands in his pockets, surveying the imbroglio, until he was carried away on the shoulders of Japanese supporters.
Hayashi was eventually arrested by the Japanese Consular Police but released under bond pending a trial. He made no bones about admitting his guilt. In accordance with established procedures in the settlement, Hayashi had the right to be tried before a Japanese court. Rather than consider the case in Shanghai, the Japanese moved him to Nagasaki. A court there found him guilty and sentenced him to two years’ hard labour, suspended for five years. The sentence was later reduced to one year suspended. He therefore got off virtually scot-free and returned to Shanghai in August 1941.
There was a certain irony (noted at the time in the pro-Chungking press) in the Japanese choice of Keswick as a target for assassination, since he was regarded as an appeaser of the Japanese for having handed over to the Chinese puppet municipality land records that had been lodged in the Settlement for safe-keeping.89 The shooting did not deflect Keswick from his accommodationist course. On 2 February 1941, his arm in a sling, he signed the latest reinterpretation of the Western Roads policing agreement with the mayor of the Chinese municipality. The document provided that the Special Political Police operating out of 76 Jessfield Road would cease their activities. As agreed in principle a year earlier, the ‘Western Area Special Police Force’ was to be established under a cooperative arrangement between the Municipal Police and the puppet municipal authorities. Gambling and opium dens in the area were to close or transfer to Nantao. Many in fact moved there but two, Farren’s Night Club and L’Eventail, both frequented by Europeans, continued to function in spite of orders from the Chinese police to close. After a time others opened again in the district – one, it was rumoured, in the presence of the puppet deputy minister of police himself.90
A few days after the agreement was signed, the meeting of the ratepayers, so rudely interrupted by the Keswick shooting, was resumed and passed without incident. Following the meeting, Godfrey Phillips held a press conference. According to a report in the pro-Japanese Shanghai Times, the council’s senior official was forced into a public confession of the extent to which the British business firms had manipulated the voting system to ensure continued British-American control:
On being asked how many registered ratepayers there were, Mr Phillips replied that there were about 9,000. It was then put to him by one of the press representatives present that according to the list issued by the SMC, six men represented 4,310 votes, another eight men 800 votes, making a total of 5,110 votes or more than half the total. The questioner then asked why the Council went to the expense of holding a meeting when these fourteen men could get together and decide on Council policies.
This apparently innocent question, of course, exposed the procedural sham into which the representatives of the Anglo-Saxon powers had been driven in their desperate desire to preserve their dominance on the council. True to the best British civil service traditions, Phillips had a ready response to the awkward questioner: ‘I won’t answer any constitutional or political questions.’91
As the annual spring election period again approached, the Japanese made it clear that they were in no mood to brook a repetition of the previous year’s loss of face. They warned the British that they could not guarantee to maintain order or restrain the indignation of the local Japanese community if Japanese representation on the council were not somehow increased. The British and Americans now had few bargaining chips left. Negotiations among the powers eventually produced agreement to suspend parts of the land regulations and create a provisional council by appointment rather than election. Each power was to nominate its own representatives under an agreed numerical quota. Japanese representation was increased to three, as was American. The number of British councillors was reduced from five to three and of Chinese from five to four. Germany, Italy, the Netherlands and Switzerland would each have one councillor. This produced a council in which the Anglo-Americans were a minority: six out of 17. The Axis powers together now held five seats. As Allman, who was reappointed, put it delicately, ‘the 1941 election was omitted’.92 The arrangement was rubber-stamped by a meeting of the ratepayers on 17 April 1941.
In spite of the war clouds over the Pacific, Shanghai’s frenzied nightlife continued as if there were no tomorrow. So did popular sporting activities. British horsemen rode their small Asiatic ponies at the municipal racecourse. Dog-racing proceeded as usual at the Canidrome. Jai Alai, the Basque game that was a Shanghai fad, attracted large crowds. And the ‘Miss China 1941’ competition delighted patrons of the Argentina night club. Chinese and foreigners alike took a more than merely sporting interest in all of these contests. As inflation ate away at the value of the Chinese currency (it shrank in value from about 3 to US $1 to 1,875 to US $1 between 1937 and May 1941) betting stakes reached astronomical heights. But behind the neon façade, the century-old Anglo-American domination of the International Settlement was dissolving.
*Stennes had been a close confidant of Hitler in the 1920s but in 1931 he participated in an abortive party revolt against Hitler in the course of which he was said to have given Goebbels ‘a good sound horse whipping’. After Hitler’s assumption of power, Stennes was arrested and tortured. Thanks to the intervention of President Hindenburg, he was released upon giving a written promise not to engage in anti-Nazi propaganda abroad. He went to China with a letter of introduction from General Ludendorff, as a result of which he served as head of Chiang Kai-shek’s personal bodyguard from 1934 to 1940. He then moved to Shanghai, installed himself in the luxurious Park Hotel, notorious as a base for Nazi agents, and ‘led a very extravagant life there’,60 Stennes’s loyalties thereafter remained unclear, but he was widely suspected of having enrolled in the Nazi cause.