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in respect to Americans there who trade with the enemy within the definition of the act or in respect to the establishment in China of a representative of the Alien Property Custodian to receive German funds or other property. If, however, the number of Americans and the importance of their transactions is considerable, and if they desire voluntarily to conform to the provisions of the Trading with the Enemy Act as applied by the War Trade Board, it might be feasible to send to Peking some one familiar with the application of the act in this country, who could informally counsel and advise Americans in China. Please cable us your opinion on this aspect of the matter.

POLK

File No. 763.72112A/2640
The Chargé in China (MacMurray) to the Secretary of State

[Telegram)
PEKING, August 9, 1918, 5 p. m.

[Received August 12.] Denby for War Trade Board:

31. Replying to your August 3, 8 p. m. If you are not satisfied that Trading with Enemy Act is enforceable against Americans in China, I recommend amendment in Congress extending the act to countries in which the United States exercises extraterritorial jurisdiction. Your suggestion that Americans be called on for voluntarily conforming to act not practicable, because half Americans would con form and those whom we wish to control would evade. Moreover, legal difficulties requiring court decision would inevitably arise. I do not consider it feasible to send to Peking some one who could informally advise Americans in China. The Legation is sufficiently informed and has sufficient staff. I strongly recommend that the act be amended as above and that Legation be instructed by the War Trade Board and the Custodian of Enemy Property to designate a member of its staff to perform the functions of a bureau of enemy trade and as far as necessary of a custodian of enemy property. The duties of the custodian of enemy property will not be held responsible [sic]. There will be no question of liquidation of enemy property but only the providing of necessary machinery for American relations with the enemy. The volume of business which would be done by the above official cannot be stated definitely in advance. It would, however, be considerable; there are large American commercial interests in China, the 1914 census showing 136 firms and 4,365 civilian Americans here resident. The present situation in China with regard to Americans is chaotic; the only power which can put it in order is the United States, and it is our plain duty to our own citizens, to China, and to our Allies to do so. I beg to express my full concurrence in the above recommendations.

MACMURRAY

File No. 763.72112A/2640
The Secretary of State to the Chargé in China (MacMurray)

[Telegram]

WASHINGTON, September 19, 1918, 5 p. m. For Denby (from War Trade Board]:

Your 31, August 9, 5 p. m. Appreciate advantages having legal status of American commercial dealings with enemy in China fixed by legislation. Difficulties procuring amendment undoubtedly mean several months' delay. Pending such amendment suggest your handling matter by informal advice to refrain from business transactions with houses on British list or considered objectionable by our representatives in China. Where contract with objectionable firm, enforceable in local courts, is existing it is proper to sanction performance of contracts. New transactions, however, should be discouraged. Party refusing to adopt suggestions of Legation or consuls should be reported to Washington as trading with enemies for action by War Trade Board upon applications for export or import licenses.

LANSING

File No. 763.72112/10051
The Consul at Shanghai (Johnson) to the Secretary of State

[Telegram)
SHANGHAI, September 10, 1918, 10 a. m.

[Received September 10, 3.34 a. m.] For War Trade Board :

May American citizens purchase German property, if sale is bona fide, for purposes industrial and commercial development? Also may Chinese beneficial owner transfer deed registered German Consulate to American?

JOHNSON

File No. 763.72112/10051
The Secretary of State to the Consul at Shanghai (Johnson)

[Telegram]

WASHINGTON, September 21, 1918, 5 p. m. [From the War Trade Board]:

Referring your September 10, 10 a. m. Where branch United States firm or person resident in the United States desires to deal with person falling within definition of “enemy” in Trading with Enemy Act formal license necessary from Bureau of Enemy Trade, Washington. Where merely American citizen residing in China dealing with enemy person no formal license necessary, and where branch United States firm or person resident in the United States dealing with merely German citizens no formal license necessary. In last two cases proper you advise as to desirability of action. In cases where United States firm or person resident in the United States trading with person falling within definition of “enemy” under Trading with the Enemy Act you should instruct them to make application through United States connections for formal license. Recommendations from you in such cases desirable. Reference cases where no formal license required as set forth above and where it is proper you should advise American citizen or American firm. In such cases follow general rule that where benefit to American large in proportion to benefit to enemy, transaction need not be disapproved. Deemed advisable for a time that you cable for advice in all but clear cases so that precedents may be established which you can follow in future cases. Reference particular question in your cable September 10, assuming case one where no formal license required as explained above, you should advise against transaction unless situation such that American will suffer very greatly if purchase not permitted or advantage to American interests through the purchase will be extraordinary. If American is branch of United States firm or person resident in United States [and] German is an enemy within definition of Trading with Enemy Act you should advise that they apply to Washington for an enemy trade license. You should in addition wire your recommendation. Reference second question, may Chinese beneficial owner transfer deed registered German Consulate to American, if case is one where no formal license required, as explained above, it would seem proper that you interpose no objection to transaction inasmuch as from meagre facts in your cable apparently essentially interested parties are Chinese and American. German connection purely formal. Hereafter in cabling for advice please give full details. Your cable of September 10, [10] a. m., unsatisfactory this regard.

LANSING

PURCHASE OF AUSTRIAN SHIPS: THE TAKING OVER OF THE

“ MARTHA WASHINGTON” File No. 863.852/12 The Ambassador in Austria-Hungary (Penfield) to the Secretary of

State

[Telegram]
VIENNA, March 20, 1917, 4 p.m.

[Received March 22, 3 a. m.] 1773. Referring to Department's telegram 791, July 14, 1915, and subsequent correspondence. Austro-Americana Steamship Co. re

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quests transmission of following telegram to their agents, Phelps Bros., 17 Battery Place, New York:

You have authority after consulting with Buenos Aires to sell to neutral buyers our Þora, Erny, Lucia, minimum $160; Clara, Ida, Teresa, $150 per ton dead weight; Anna best possible; cash payment through Holland less one-fifth to remain at Buenos Aires' disposal. Buyers must, however, guarantee either to keep vessels in port during present war or run them only between present neutral American ports giving at the same time substantial guarantee to that effect. Eventual expenses of putting vessels on highest Lloyd register class to be at our charge for same. Please communicate us direct reply soonest possible.

[PENFIELD]

File No. 863.852/12
The Secretary of State to the Ambassador in Austria-Hungary

(Penfield)
[Telegram]

WASHINGTON, March 23, 1917, 5 p. m. 1617. Your March 20, 4 p. m. Inform steamship company that, Department's regulations being now more strictly adhered to than in 1915, message will not be forwarded.

LANSING

File No. 863.852/12a
The Secretary of State to the Chargé in Austria-Hungary (Grew)

[Telegram)

WASHINGTON, April 19, 1917. 1644. For Austro-Americana (from Phelps Bros. & Co.] :

We have sold to responsible American buyers for United States registry all 10 steamers covered by your wireless and as authorized by your cable from Lucerne received April 2. Price $123

per

deadweight ton less our 5 per cent commission and legal expenses. Buyers pay repairs for wilful damage up to $25,000 each steamer. Ten

per cent on your boats already paid; balance on delivery of bills of sale. Payments other 3 due in same manner on receipt of definite authority from owners. Necessary they file power of attorney with our Embassy in Vienna and have Washington State Department advised thereof. Have exhibited all papers including guaranties to your Embassy, but in the absence of direct Government instructions

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your Ambassador declines to direct consuls to close Austrian registers. Ambassador has, however, cabled recommending transaction and asking necessary instructions. Do everything possible to expedite and have captains instructed to cooperate fully with us. Recommend you obtain for us firm authority and net price on other Austrian steamers, especially Martha, Laura, Alice, Borneo, Morowitz, lodging necessary powers of attorney with American Ambassador. Borneo, Morowitz in jeopardy because funds exhausted and $35,000 debts already unpaid. Phelps Bros. & Co.

LANSING

File No. 863.852/12b
The Secretary of State to the Minister in Switzerland (Stovall)

[Telegram]

WASHINGTON, April 14, 1917, 5 p. m. 515. For Ferruccio Schiavon, Lucerne [from Phelps] :

Have sold your seven and Tripcovich three. Owing to incompleteness of authorization, Tripcovich sale subject to direct confirmation. Antonio has cabled also authorizing sale of Martha, Virginia, Laura, Alice, and in case you need all your eleven free of any trade restrictions. Tripcovich should confirm this also. Only obstacle to our completing sales and collecting money is your Ambassador's refusal to direct your consuls here to close registers which is present condition of buyers' ability obtain American flag. Most important in order to avoid further dangerous delay that your officials here be instructed to act immediately. Suggest you try to obtain for us complete authority for Budapest, Morowitz. Reply by cable. Phelps.

LANSING

File No. 863.852/464

Memorandum of the Counselor for the Department of State (Polk)

April 17, 1917. Mr. Haight, representing the Austrian Line, showed me a telegram from Buenos Aires, dated April 17, in reply to his cable of April 16, as follows:

We think telegram received from Barcelona must be delayed one as we have received just now other from Barcelona authorizing sale Laura, Alice on best possible terms without mentioning any restric

* The total purchase price was approximately $6,500,000. These seven ships were sold by the purchasers to the Shipping Board in May, 1917. For the names of the ships see telegram of Mar. 20 from the Ambassador in AustriaHungary, ante, p. 445.

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