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non -3- Mr. Barnett asked the two visitors which motives they believed to be the most important in connection with the Communist detention of key businessmen: (1) a desire to have their expert technical and managerial knowledge, (2) a desire to insure a continued flow of American dollars, or (3) the use of Americans as security againat Kuomintang air raids on the city or for other political purposes. Mr. Hopkins and Mr. Herod explained that probably all three notives were represented, but differed accord- ing to the circumstances of the particular American company. E.g. in the case of the Shanghai Power Company the motive would be security against bombings, and in the case of the International General Electric Company it would be e continuation of remittances as a measure to solve the social problem of labor. There was a brief discussion of the Department's communi- cations facilities and it was explained that by tomorrow we would probably have no code facilities of our own with Communist China. However, the visitors were informed in confidence that we had arranged with the Britieh to transmit limited amounts of code traffic. Mr. Herod was told that this channel could be used to get a message to Americans there on the escape project, enabling the management of the parent firms in New York to give their views on the matter. In connection with this subject, the Secretary merely offered the view that the escape plan, of course, appeared dangerous but, as Mr. Hopkins had explained, the mental predicament of the persons concerned could be readily understood. Mr. Herod inquired regarding the present status of the recognition question. The Secretary replied that no action was being taken on that subject at this time. He said that various considerations entered into the question, one being that the nations that have recognized to date appear to be in little if any better position than those who have not. and ARENIVES SERVICE In summary, Mr. Herod gave it as his understanding that: (1) The Government recognized its responsibility for the protection of these nationals. (2) The Department was attempting to concert with other Governmente to press for permission for Americans and other foreigners to leave Shanghai. (3) The Consul General at Peiping would endeavor to approach the highest Communist authorities on the subject. (4) That 2

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    "ocrText": "non\n-3-\nMr. Barnett asked the two visitors which motives they\nbelieved to be the most important in connection with the Communist\ndetention of key businessmen: (1) a desire to have their expert\ntechnical and managerial knowledge, (2) a desire to insure a\ncontinued flow of American dollars, or (3) the use of Americans as\nsecurity againat Kuomintang air raids on the city or for other\npolitical purposes. Mr. Hopkins and Mr. Herod explained that\nprobably all three notives were represented, but differed accord-\ning to the circumstances of the particular American company. E.g.\nin the case of the Shanghai Power Company the motive would be\nsecurity against bombings, and in the case of the International\nGeneral Electric Company it would be e continuation of remittances\nas a measure to solve the social problem of labor.\nThere was a brief discussion of the Department's communi-\ncations facilities and it was explained that by tomorrow we would\nprobably have no code facilities of our own with Communist China.\nHowever, the visitors were informed in confidence that we had\narranged with the Britieh to transmit limited amounts of code\ntraffic. Mr. Herod was told that this channel could be used to\nget a message to Americans there on the escape project, enabling\nthe management of the parent firms in New York to give their\nviews on the matter. In connection with this subject, the Secretary\nmerely offered the view that the escape plan, of course, appeared\ndangerous but, as Mr. Hopkins had explained, the mental predicament\nof the persons concerned could be readily understood.\nMr. Herod inquired regarding the present status of the\nrecognition question. The Secretary replied that no action was\nbeing taken on that subject at this time. He said that various\nconsiderations entered into the question, one being that the nations\nthat have recognized to date appear to be in little if any better\nposition than those who have not.\nand\nARENIVES\nSERVICE\nIn summary, Mr. Herod gave it as his understanding that:\n(1) The Government recognized its responsibility for the\nprotection of these nationals.\n(2) The Department was attempting to concert with other\nGovernmente to press for permission for Americans and other\nforeigners to leave Shanghai.\n(3) The Consul General at Peiping would endeavor to\napproach the highest Communist authorities on the subject.\n(4) That\n2"
}