I stated that the American Government was receiving claims from American citizens and that this matter would have to be discussed and settled sooner or later."1 NELSON TRUSLER JOHNSON 493.11/1556: Telegram The Minister in China (Johnson) to the Secretary of State NANKING, April 13, 1931—3 p. m. [Received April 13-8:35 a. m.] My April [March] 7,9 p. m. Minister for Foreign Affairs informed me today that he had discussed possibility of negotiation of an agreement for a claims commission with Wang Chung-hui and that reaction to such an agreement was unfavorable. He said that response would be negative if matter were taken up officially. JOHNSON 493.11/1556: Telegram The Secretary of State to the Minister in China (Johnson) WASHINGTON, May 7, 1931-2 p. m. 173. Referring to telegram of April 13, 3 p. m., from the Minister at Nanking in regard to proposed claims commission. 1. Department suggests that you bring following to attention of appropriate Chinese authorities: (a) Adoption of draft protocol enclosed with Department's 1467 of February 3, 1930,12 and setting up of Commission in accordance therewith would not, beyond the expense of the Commission, impose any financial obligation upon the Chinese Government. (b) The work of the proposed Commission would simply be to run the claims through the mill and to determine what is the net obligation of China in dollars and cents. The question of settlement of the claims would be left for later discussion. (c) Until the claims can be passed on by a Commission the Chinese Government would appear to be faced with a much larger indefinite obligation than would be shown to exist when the Commission had completed its work. (d) The Department would be prepared to consider such changes in the terms of the proposed protocol as would meet the wishes of the Chinese Government. Specifically, the Department authorizes you to suggest to the Chinese Government that there be eliminated from the proposed protocol that class of claims comprehended by paragraph 3 of Article I of the protocol, provided that we have sufficient assurance "The Chinese Minister for Foreign Affairs subsequently declined to reconsider the matter. 12 Foreign Relations, 1930, vol. I, p. 583. that the present program of the Chinese Government with regard to the liquidation of this class of indebtedness will be adequate to take care of such claims and that it will be carried through. You are further authorized to indicate to the Chinese Government a willingness, should it prefer, to have the claims passed on by a mixed Commission, composed of one American, one Chinese, and a third and presiding member of neutral nationality, and to include within the jurisdiction of the Commission claims of Chinese nationals against the United States. (e) The present trend of international thought is in the direction of settling justiciable international disputes by arbitration. During the past few years the United States Government has either completed or initiated arbitrations for the settlement of claims with the following countries: Austria-Hungary, Cuba, Egypt, Germany, Guatemala, Mexico, Norway, Panama and Sweden. The claims included in these completed and pending arbitrations number approximately 27,000 and the total amounts claimed run into hundreds of millions of dollars. Usually the awards amount to a relatively small percentage of the sums claimed. In most of the cases of arbitration just mentioned the Commissions were composed as above suggested. (f) The work of the proposed Commission would be devoted to bringing about that condition of facts which the Chinese Government is now understood to desire, namely, the clarification of its position with respect to all foreign obligations. STIMSON 493.11/1566: Telegram The Minister in China (Johnson) to the Secretary of State PEIPING, May 23, 1931-2 p. m. [Received May 23-8:50 a. m.] 294. [From Perkins.] Department's 173, May 7, 2 p. m. Following from the Minister at Nanking: "I saw Minister for Foreign Affairs yesterday and conversed with him along the lines of the Department's instructions under reference. Wang stated that their objections to original draft were three: (a) The proposal was too expensive. If they reached such an agreement with us other countries would ask some definite arrangements. (b) The proposal was one-sided and for an indefinite period. (c) As long as the unequal treaties continued it would be difficult to find members of such a commission who would not be prejudiced by that fact. Because of (b) and (c) it would be difficult to defend such an arrangement before the people. I said that as regard[s] (a) I had no answer but that I thought it would be worth the expense to get the situation in regard to claims cleared up; that as regards (6) I was authorized to say that we would consider subjecting claims of Chinese nationals against the Government of the United States to the examination of the same commission and I took the liberty of suggesting that as regards the terms of such a convention I thought it might be preferable to limit the convention to claims now outstanding and to such claims as might arise during the life of the convention with a provision that the commission might be continued at the end of the term of the convention if the two countries were satisfied with its working. I also stated that we would consider the making of the commission into a mixed one if the Chinese preferred. As regards (c) I said that I thought it reasonably sure that we could find a nationally known man of nonextraterritorial status to preside although I was not sure of the Department's attitude on this. Dr. Wang said that this placed the matter in a new light and asked me to draft an agreement along these lines for his consideration. Will the Department give me an outline to follow which I can present to him?" For the Minister: 493.11/1578 Memorandum by the Chief of the Division of Far Eastern Affairs (Hornbeck) of a Conversation With the Chinese Chargé (Yung Kwai) [WASHINGTON,] July 16, 1931. 13 Mr. Yung Kwai having called at Mr. Hornbeck's request, Mr. Hornbeck, after exchange of inquiries and comments with regard to the situation in China and the weather in Washington, adverted to the subject of the inquiry which Mr. Yung Kwai had made recently, at the instance of the Nanking Government, with regard to postponement of payments on intergovernmental debts 13-with reference particularly to certain Boxer Indemnity payments. Mr. Hornbeck read to Mr. Yung Kwai an informal statement-of which a copy is attached hereto.14 Mr. Yung Kwai said that this was what he had expected would be the reply; he gave every appearance of being not only satisfied but gratified; and he asked whether he might have a copy of the paper which had been read to him. Mr. Hornbeck said that he would gladly give him a copy and that it should be regarded as an informal, oral reply to the informal, oral inquiry which Mr. Yung Kwai had made. Mr. Yung Kwai said that he quite understood that the whole matter was informal. The conversation then turned again to the Chinese political situation and soon terminated. S[TANLEY] K. H[ORNBECK] "For correspondence on this subject, see vol. 1, pp. 1 ff. "Infra. 493.11/1578 The Department of State to the Chinese Legation 15 In reference to the question whether the proposal made by President Hoover for postponement for one year of payments on intergovernmental debts is applicable to debts owed by the Chinese Government to foreign governments, The proposal was prompted primarily by the view that the strain of payments on debt and reparations obligations which arose out of the World War had become during the present period of depression so burdensome that continuance of such payments was jeopardizing both the political and economic situation in Europe, particularly in Germany-which country seemed to be approaching the limit of its revenue raising capacity. The immediate object of the proposal was to afford relief from obligations which have arisen out of the War. It was not within the calculation or intent of the American Government that the proposal should extend beyond that realm of obligations, and the discussions which were held between representatives of the American Government and those of the other principal creditor governments, which discussions led to the acceptance in principle of the American proposal, were limited to debt and reparations payments of the character indicated above. 893.51/5550: Telegram The Minister in China (Johnson) to the Acting Secretary of State PEIPING, July 30, 1931-11 a. m. [Received July 30-3 a. m.] 472. Reuter reports from Shanghai 29th: "T. V. Soong, Minister of Finance, published warning this afternoon that bonds secured on customs revenue issued by Canton rebels will not be recognized in any way by the Government as having claim on national funds. Statement points out that Canton rebels in proposing to issue premium bonds secured on the additional customs duties are not only infringing upon integrity of the customs service but are usurping recognized rights of bondholders of foreign and national obligations. It is emphasized that these obligations are secured on the customs revenue as a whole and not on any specific part of it." JOHNSON Copy read and handed to the Chinese Chargé on July 16, 1931, by the Chief of the Division of Far Eastern Affairs. 493.11/1566 The Secretary of State to the Minister in China (Johnson) No. 643 WASHINGTON, December 10, 1931. SIR: The Department refers to the Legation's telegram No. 294 of May 23, 1931, and notes with gratification that the Legation's conversations with the Chinese authorities in regard to the concluding of an arrangement for the adjudication of claims of the nationals of either Government against the other seem likely to produce definite results. As a basis for further discussions of this matter with the Chinese authorities, there is enclosed for the use of the Legation a draft of a proposed convention between the two Governments. While it is hoped that the Chinese authorities may be willing to accept this draft in its entirety, the Department will be glad to give attentive consideration to any amendments which such authorities may have to offer. With reference to the three points mentioned in your cable No. 294, you may, in presenting this draft convention for consideration, make the following observations: (a) The Commission should not prove unduly expensive. The Convention makes no provision for the payment of the claims adjudicated and consequently does not directly obligate the Chinese Government to any further immediate expenditures than those necessary to support the commission. It is believed that all claims could be adjudicated within the two year period provided by the Convention. If other countries ask like treatment they may be expected to accept conventions with similar provisions. The work of the commission in reducing the present outstanding claims against the Chinese Government to å definite amount would seem, in any event, to be an appropriate step in the direction of a sound financial re-organization of the Government and consequently of an improved national credit. (b) These objections are entirely overcome by the present draft of convention. (c) This Government believes there are a considerable number of eminent statesmen of non-extraterritorial countries any one of whom China could agree to accept as Presiding Commissioner with absolute confidence that its interests would be fully protected in accordance with the terms and intent of the Convention. This Government is willing to agree in advance that the Presiding Commissioner shall be of non-extraterritorial nationality. Very truly yours, HENRY L. STIMSON |