File No. 493.11/379.

The American Chargé d’Affaires to the Secretary of State.

[Extract]
No. 814.]

Sir: Referring to the Department’s instruction No. 290, of October 4, 1912, requesting the Legation to report what action, if any, had been [Page 205] taken by the commission appointed by the Diplomatic Body to classify the claims of foreign residents of China arising out of the revolution and to make recommendations in regard to them, I have the honor to send enclosed a copy of the commission’s report, which was presented to the Diplomatic Body at its meeting held April 7th. The diplomatic representatives, after some slight amendments, adopted the report and decided to recommend its approval by their Governments.

Mr. Calhoun was chairman of the commission mentioned, and the report was practically completed before he left. Upon his departure, at the request of the commission, I accepted a place thereon, but there was only one meeting held thereafter: that for the final reading and adoption of the report.

* * * The principle of liability was admitted by the first Premier of the Republic, Tong Shao-yi, in his address at Nanking on March 29th, 1912 [before the so-called National Assembly, at Nanking] . Practical recognition of the liability was also given by the settlement of certain claims of French citizens in the Province of Yunnan. These, however, were probably settled by the provincial authorities. A general admission of the principle of liability was made also by the Minister of Finance in his letter-of February 1, 1913, to the six Ministers. * * *

But to dispel all doubt in regard to the matter a committee consisting of the Ministers of Great Britain, France, Germany and Italy was appointed by the Diplomatic Body on April 7th to call upon the Minister of Foreign Affairs and discuss the subject with him.* * * As will appear from the report of the committee, enclosed, the Ministers mentioned called upon the Minister of Foreign Affairs on April 10th and stated that they had been appointed to discuss with him the question of foreign claims arising out of the revolution and to propose that the Foreign Office should appoint representatives to meet representatives of the different Legations to go into the claims and agree upon the amounts due.

The report of the committee came up for consideration at the next meeting of the Diplomatic Body, April 16th. It was decided to agree to the proposal of the Minister of Foreign Affairs that representatives of the Ministries of Finance and the Interior, if so desired, should take part in the joint examination of claims and to propose that the meetings be held at the Foreign Office three days each week. It was further agreed that the order in which the Legations should present their claims should be determined after the Chinese Government should have appointed its representatives. * * *

The Diplomatic Body further agreed that the head of each Mission, in transmitting to his Government the report of the commission on classification of claims, should point out the desirability of approving the report without amendment, if possible, in order to secure uniformity in the treatment of claims by the several Powers and prevent delay in their consideration. Amendment by one or more Powers may lead to further prolonged discussion and consequent loss of time.

It was decided to be advisable, furthermore, to call attention to the statement made in the second paragraph of the report on classification of claims to the effect that the commission did not consider [Page 206] it within their province to express an opinion on the subject of indemnities to foreign governments for military and naval expenses, and to suggest that the foreign offices of the Powers concerned should consult together and agree upon a uniform policy in regard to such expenses. I have the honor, in reporting this suggestion to the Department, to express the hope that the impoverished Government of China will not be compelled to bear the heavy burden of compensation for such expenditures, and that the Department may be disposed to use its good offices to induce the other Powers concerned to accord the young Republic of China a generous treatment in this regard. * * *

In transmitting this report, I have the honor to request that if it shall meet with the approval of the Department, I may be instructed by cable to that effect so that the Legation may at once proceed to classify American claims accordingly and formally present to the Chinese Government those that fall within the categories A and B.

I have [etc.]

E. T. Williams.
[Inclosure 1.]

Diplomatic Circular No. 58.

The Dean has the honour to circulate a report which he has received from the Commission appointed by the Diplomatic Body to investigate the question of foreign claims arising out of the Revolution and would suggest that it should form the subject of examination at a meeting of the Heads of Missions.

report of the claims commission.

The Commission entrusted by the Diplomatic Body with the examination of the principles relating to foreign claims arising out of the revolution have in the first instance examined each case communicated to them by the various legations. They then grouped the claims according to their general character and subdivided them in convenient categories. The object of the Commission in so doing was to furnish the Diplomatic Body with a common basis for estimating the acceptability of the claims which have been or will be submitted by those interested to their respective Legations.

The Commission did not consider it was within their province to express an opinion on the subject of indemnities to foreign Governments for military and naval expenses as the decision whether or not to present such claims rests, in the view of the Commission, with the Governments themselves.

It will be seen then that the Commission have divided the claims into four general classes. Class A covers those which, in their opinion, must be regarded as arising directly and immediately out of the Revolution, and the responsibility for which the Chinese Government cannot disclaim. Class B embraces claims which, while legitimate in principle, are probably not in every case attributable to the Revolution and are therefore open to discussion. Class C covers claims for losses in respect of which the Commission do not consider that an indemnity can fairly be demanded from the Chinese Government. Class D includes claims which the Commission do not consider can properly be classed among the Revolutionary claims.

The accompanying minutes of the meetings will be found to illustrate the views of the Commission on the several questions which arose in the course of discussion and the Commission confine themselves here to drawing attention to the following points in particular:

In the case of merchandise destroyed or looted, it is understood that the owner ought to be entitled to compensation equal to the market value of the goods prevailing at the time of loss, or in the case of export goods, to the contract price.

[Page 207]

In determining the rates at which compensation should be paid for death or injury the Commission have the honour to suggest that the principles adopted by the Crown Advocate of His Britannic Majesty’s Government in adjudicating the Boxer claims might be followed. An extract from Mr. Wilkinson’s report is enclosed for the convenience of the Diplomatic Body.

In the case of damages caused to foreigners by the destruction, deterioration or loss of property held by them as security, it should be understood that the indemnity payable on that account cannot exceed the amount of the debt for which such security was given.

It should be explained that in the use of the words “Chinese Government” or “Chinese authorities,” the Commission have drawn no distinction between the Imperial and the Revolutionary or Republican authorities.

The Commission recommend that interest payable on claims admitted should not exceed five per cent. on personal claims or seven per cent. on commercial claims from the date of loss to the date of payment.

class a.

Indemnities to Municipalities:

1.
Destruction and loss, as the direct result of the Revolution, of movable and immovable property belonging to foreign municipalities.
2.
Expenses for protection and self-defense, including loss caused by the deterioration and [sic] unused provisions recognized as of a municipal character.

Indemnities to Societies, Firms and Individuals:

3.
Destruction and loss of movable and immovable property, including goods, personal effects, money and documents of commercial value belonging to foreign societies, firms and individuals, whether in the capital, a treaty port, or in the interior: (a) in the course of or as a direct result of warlike operations, or by the act of looting soldiers or other undisciplined troops; or (b) by the act of robbers or pirates or as a result of acts of an anarchical character.
4.
Goods under transit pass imported or destined for export, the property of foreign merchants, looted or destroyed by Chinese soldiers and robbers in the interior.
5.
Loss sustained owing to appropriation by Chinese authorities of sampans, wharfs, pontoons, hulks, launches, pontoon bridges, railway material, ammunition and other explosives and any other kind of goods belonging to foreigners.
6.
Compensation for: (a) foreigners who lost their lives or were injured physically and incapacitated as a result of the Revolution; and (b) Chinese in foreign employment similarly affected in the performance of their duty to their foreign employers.
7.
Salaries and other payments due under contract to foreigners in Chinese Government service or institutions unpaid owing to the Revolution.
8.
Actual loss for non-fulfillment or delay in execution, owing to the Revolution and through no fault of the foreign claimants, of contracts and other engagements entered into by foreign firms and individuals with the Chinese authorities; such loss includes freight, reshipment, storage, insurance, and loss or deterioration of goods.
9.
Traveling expenses of foreigners in Chinese official or semi-official service to an adjacent place of safety and return journey. Extra living expenses during absence, and rent of houses.
10.
Deposits of money or investments in Chinese Government Banks or other Government Departments, not recovered.
11.
Actual loss in industrial enterprises such as damage to and deterioration of machinery and materials, resulting from unavoidable suspension or delay in working owing to local Revolutionary disturbances.
12.
Rents not recoverable and rents paid in advance where occupation and use were actually prevented by military operations or the acts of Chinese soldiers.
13.
Damages caused to foreigners by the destruction, deterioration or loss of property held by them as security.

class b.

Indemnities to Societies, Firms and Individuals:

1.
Expenses incurred in protecting movable and immovable property belonging to foreign societies, firms and individuals in the capital, in a treaty port or in the interior.
2.
Fees and expenses incurred in determining the amount of damage sustained, of whatever nature.
3.
Loss of personal effects, including money, of Chinese employees of foreign firms and individuals.
4.
Demurrage caused by the detention of ships or prohibition of voyage: (a) under orders of the Chinese authorities; (b) as a measure of precaution or necessity taken by the foreign consuls or others in authority.
5.
Actual loss for non-fulfillment or delay in execution, owing to the Revolution and through no fault of the foreign claimants, of contracts and other engagements entered into by foreign firms and individuals with: (a) other foreign firms and individuals; (b) Chinese firms and individuals. Such loss includes freight, reshipment, storage, insurance and loss or deterioration of goods. Also forfeits actually paid.
6.
Traveling expenses of foreigners (not in Chinese official or semi-official service) to adjacent places of safety, but not the expense of the return journey.
7.
Debts and professional fees recognized as valid, which can no longer be recovered, owing to the death, flight or insolvency of Chinese debtors or clients traceable to the Revolution.
8.
Usual salaries of foreign employees of foreign firms whose services could not be turned to account.
9.
Diminution as the result of pillage in the value of guaranties given by compradores to foreign firms.

class c.

Indemnities to Municipalities:

1.
Diminution of municipal income caused by the Revolution.
2.
Rents of houses paid in advance where occupation was prevented.
3.
Salaries and wages of employees whose services could not be turned to account owing to the Revolution.

Indemnities to Societies, Firms and Individuals:

4.
Telegrams and such like charges necessitated by the abnormal state of affairs.
5.
Prospective profits not realized owing to the nonfulfillment or delay in the execution of contracts and other engagements entered into by foreign firms and individuals with: (a) the Chinese authorities; (b) other foreign firms and individuals; (c) Chinese firms and individuals.
6.
Extra living expenses incurred by foreigners owing to enforced absence from the usual place of residence, e. g. rent of houses and temporary accommodation of business. All similar expenses incurred in respect of Chinese servants and employees.
7.
Expenses of removing property of whatever kind to a place of safety and replacing it.
8.
Expenses incurred for reduction of staff. Extra wages for foreign and Chinese employees.
9.
Freight, insurance and storage of stock-in-trade which could not be realized or suffered depreciation and expenses through congestion of stock.
10.
Interest on capital which could not be utilized owing to the troubles.
11.
Loss of prospective profit owing to partial or wholesale deterioration of stock-in-trade.
12.
Loss owing to fluctuation of exchange, appreciation or depreciation of market prices and appreciation of freight and transport.
13.
Additional wages necessitated by the rise in the price of labor.

class d.

1.
Claims for principal and interest on provincial loans unpaid.
2.
Loss owing to inconvertibility or depreciation of Chinese Government and provincial bills and paper money attributed to the Revolution.
3.
Claims in respect to alleged illegal and unwarranted imposition of taxes during the disturbances.
(signed)
C. Sforza

E. T. Williams

Robert Everts

K. Midzuno

E. S. Scott

Boris Pelekhine

G. Riedesel

J. Borel

[Page 209]
[Inclosure 2]

Extract from Mr. Wilkinson’s Report.

Claims for compensation for the death of relatives fall naturally into two classes: Claims on behalf of the children of murdered parents and those by other relatives for loss of support, total or partial, actual or reasonably prospective, rendered or undertaken by those killed.

Death claims on behalf of children were dealt with as follows: The children’s ages and the station of life of the parents being ascertained, a sum equivalent to the present value of an annuity at three per cent of whatever sum was necessary and fitting for the education of each child for the number of years to elapse before attaining the age of twenty-one was calculated and allowed. In addition to this, such sum was allowed as would, invested at compound interest at three per cent, for the same number of years, provide for each child at twenty-one a necessary and fitting sum for his advancement in life.

In dealing with death claims on behalf of relatives, the age of the beneficiary was ascertained and also the actual or average annual sum received from the deceased. The average expectation of life of a person of the claimant’s age being taken, a sum equal to the present value of an annuity for such number of years at three per cent of such annual sum was awarded. In case of prospective benefit to have been received if the murdered person had lived, the sum promised or reasonably expected to be paid by the deceased was taken as a basis of calculation.

In case of partial disablement I adopted, where practicable, the following method of assessment: I obtained evidence as to the extent to which the life of the claimant was, from an insurance point of view, damaged; that is to say, the amount of extra premium which an insurance office would demand on the claimant, if otherwise sound, applying for a policy on his life, the extent of which they would “load” the policy. The principal sum on which my calculation was based being that in which the claimant would naturally, from his position in life, take out a policy if about to marry, I then allowed the capitalized value of these extra premia as compensation for the injury received.

[Inclosure 3.]

Diplomatic Circular No. 78.

The Dean has the honour to circulate herewith the procès-verbal of the interview which the Italian, German and French Ministers and himself had with Mr. Lu on the 10th instant respecting the foreign claims arising out of the revolution.

The Dean has the honour to suggest that this question should be further discussed at a meeting of the Diplomatic Body and he begs to invite his Honourable Colleagues to come to the British Legation for the purpose on Wednesday, the 16th instant, at 3.00 p.m.

procès-verbal.

The Ministers of Great Britain, Italy, Germany and France called on Mr. Lu—with whom was Mr. Wang—at 4.30 p.m. on Thursday, April 10, 1913.

The Ministers informed Mr. Lu that they had been deputed by the Diplomatic Body to discuss with him the question of foreign claims arising out of the Revolution. The Diplomatic Body had appointed a Commission to examine the principles relating to these claims and this Commission had now completed its task of classifying the claims communicated by the various Legations in accordance with the principles agreed upon. The report of the Commission having been presented to the Diplomatic Body, the latter now desired to propose to Mr. Lu that the Wai Chiao Pu should appoint representatives to meet representatives of the different Legations to go into the claims and agree upon the amounts due with a view to future payment.

Mr. Lu said that the Chinese Government accepted the principle of liability for losses arising out of the Revolution and he welcomed the proposal of the [Page 210] Diplomatic Body; he presumed that the latter would arrange the order in which the claims of the different Legations should be dealt with.

The Ministers replied that they would report Mr. Lu’s answer to the Diplomatic Body who would then make further suggestions as to the procedure to be followed.

Mr. Lu added that he would inform the Cabinet of the result of this interview the following day and as it was possible that other Ministries—such as the Ministry of Finance and the Ministry of the Interior—might desire to be represented at the joint examination of claims, he would be glad to learn how a request for such representation would be viewed by the Diplomatic Body.

The Ministers replied that, speaking for themselves, they had no objection to the proposal, which would probably tend to facilitate matters; they would lay the matter before the Diplomatic Body and would communicate further with Mr. Lu on this and the other points raised at an early date.

Mr. Lu suggested that the place of the proposed conference should also be considered at the same time and concluded by expressing his desire to do all in his power to promote an early and satisfactory solution of the whole question.

(Signed)
J. N. Joedan

C. Sforza

Haxthausen

A. R. Conty
[Inclosure 4—Extracts.]1

The Ministry of Foreign Affairs to the Six Ministers.

Your Excellencies: With reference to the reorganization loan at present under negotiation, there are certain points which require elucidation. On January 9th I received your excellencies’ joint memorandum on the subject and after consultation with the Minister of Finance I have decided on the following arrangement in two articles:

(1) The Chinese Government agrees to grant just and equitable indemnities for the loss and damage suffered by foreigners during the recent revolution.

To this end the Chinese Government will set aside a sum of two million pounds sterling out of the proceeds of the present loan of £25,000,000 for the purpose of meeting the indemnities above referred to.

(2) The admissibility of the claims and the amount of the indemnities to be paid shall be jointly determined by the Legations and the Chinese Government. In case of disagreement, recourse shall be had to arbitration.

* * * * * *

The above two articles being of a satisfactory nature, the arrangement therein contained can be adopted, and I have the honor to inform Your Excellencies accordingly.

With compliments,

Ministry of Foreign Affairs.
  1. Inclosure to File No. 893.51/1358.