File No. 763.72112A/2640

The Chargé in China ( MacMurray ) to the Secretary of State


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 conform 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.