File No. 493.11/512.
No. 299.]
American Legation,
Peking,
July 8, 1914.
[Inclosure—Extract.]
Consul Williams
to Minister Reinsch.
American Legation,
Peking,
June 25, 1914.
Sir: I have the honor to submit the
following report on the several claims the presentation of which to
the Chinese Claims Commission was entrusted to my [Page 93] care; on the principles which apparently
have guided that commission in effecting such liquidations; and on a
few questions which have been debated with that Commission without
any agreement having been reached between it and the claims
delegates of the several legations.
Generally speaking, the Chinese Commission has been ready to
recognize the liability of the Chinese Government under its
undertakings of February 1, 1913, and April 12, 1913,38 * * * it has denied liability for damages sustained
through looting when such was due solely to the generally disturbed
state of the country and when it cannot be shown, or inferred from
their presence in large bodies, that troops participated therein. It
has further denied the liability of the Chinese Government for all
such indirect and non-proximate damages as those suffered by foreign
trading interests through the default of Chinese debtors, even when
such default was the direct result of bankruptcy caused by the
Revolution. The position of the Chinese Commission with respect to
this latter class of claims has been attacked by several of the
legations, and the question of principle involved does not yet
appear to have been decided finally. * * *
The two chief grounds of dispute still unsettled between the claims
delegates of the Legations and the Chinese Commission are: (a) the
liability of the Chinese Government for damages of an indirect
nature, and (b) its liability for interest on claims allowed.
The majority of the claims alleged by the Chinese Commission to be
“indirect” (and practically all of the American claims of that
description) are for damages sustained by reason of the inability of
Chinese debtors of foreign firms to discharge their liabilities,
such inability proceeding from bankruptcy due to the disturbed
conditions of trade caused by and consequent upon the Revolution.
These claims may be divided roughly in two classes: (1) those
preferred by banking institutions on account of their inability to
recover sums advanced in the ordinary course of trade, and (2) those
preferred by merchants on account of the inability of Chinese
merchants to fulfill contracts entered into with the claimants.* * *
By the terms of the report of the committee of the Diplomatic
Body39* * * the claims here under discussion were
listed under class B, section 7, as “legitimate in principle” but
open to discussion as to the facts, it being remarked that not all
of such claims were attributable to the Revolution. * * *
The liability of the Chinese Government for interest on the claims
passed for payment has also occasioned considerable discussion.
Under the report of the committee of the Diplomatic Body mentioned
above it was recommended that interest be charged at the rate of 5%
par annum on ordinary claims and 7% per annum on commercial claims,
from the date of loss to the date of payment. The Chinese Government
has resisted these demands strenuously and has suggested informally
that the question be sent to arbitration.* * * I respectfully
venture to suggest that if the Chinese Government be held to the
payment of interest—a liability which the majority of the precedents
would seem to justify—the term during which it runs should commence
in each case from the date on which the Chinese Government was put
in notice of the existence of the claim concerned and should cease
on payment of the claim. * * *
The Chinese Government has given a voluntary assurance that it will
indemnify foreign interests for losses sustained by reason of the
1913 revolt, but has limited its liability in the premises to damage
occasioned directly by the military operations of either force. As
regards the losses due to the ravages of brigands, the liability of
the Government may be inferred from its undertaking to make good the
damages sustained in several specific instances* * * and from the
fact that investigations with a view to ascertaining the actual
amount of damage sustained by foreigners are now being made by the
Chinese authorities. It should be noted that the liability of the
Chinese Government to pay interest on the 1913 claims does not
appear to have been suggested.* * * I have [etc.]
