The Acting Secretary of State to the Minister in China (Reinsch)

No. 992

Sir: The Department is in receipt of your despatch No. 2615, of March 31, 1919, with which was inclosed copies of a despatch of February 6, 1919, from the Consul General at Moukden, and your two instructions to him of March 31, regarding (1) the attempt of the South Manchurian Railway Company to levy an income tax, for municipal purposes, on Americans residing within the railway zone at Moukden, and (2) the resjoective rights of American and Japanese officers in connection with the arrest of American citizens in the Japanese settlements and railway zone.

In reply the Department may observe that the South Manchurian Railway was formerly a part of the Chinese Eastern Railway which was constructed, pursuant to an agreement entered into on September 8, 1896, between the Chinese Government and the Russo-Chinese Bank.49 That agreement reserves to the Government of China political jurisdiction over the railway zone, Article V providing that “the Chinese Government will take measures for the protection of the line and of the men employed thereon” and that “all crimes [Page 450]and law suits arising on the land of the Company will be dealt with by the local officials, in accordance with treaty.”

The South Manchurian Railway, designated in the agreement as the “Southern Manchuria Branch of the Chinese Eastern Railway,” was constructed pursuant to an agreement of July 7 [6?], 1898 between the Chinese Government and the Chinese Eastern Railway Company.50 By the terms of that agreement, also by Article VIII of the Convention of March 27, 1898 between Russia and China for lease to Russia of Port Arthur and the adjacent waters,51 it was provided that the line, which should begin at a station to be selected on the main line of the Chinese Eastern Railway and extend to the seaports of Dalny and Port Arthur, in the Liaotung Peninsula, should be “dealt with in careful compliance with the terms of the contract of …52 September 8, 1896.”

The question regarding the exercise of political jurisdiction over the Manchurian Railway Zone was discussed at some length in 1908 and 1909 between this Government and the Russian Government,53 as a result of the efforts of the Chinese Eastern Railway to establish a municipality at Harbin. This Government then took the position that the contracts under which the Railway was operating were for the establishment of a business enterprise; that the exercise of political powers by the Company would be out of harmony with the natural interpretation of the text of the agreements, as well as inconsistent with the treaty rights of residence and jurisdiction granted by China to other powers. ( Foreign Relations 1910, Page 220). This view was finally acquies[c]ed in by the Russian Government, as evidenced by the notes exchanged between the Wai-Wu Pu and the Russian Minister on May 11, 1909,54 wherein it is specifically recognized that the rights and privileges enjoyed by the subjects of other powers under the treaties between China and such powers were not, in any way, impaired by the railway concession.

It is the view of the Department that in acquiring the Southern Manchuria Railway under Article VI of the Treaty of Portsmouth,55 the Japanese Government succeeded to such rights only as the Chinese Eastern Railway had, under the above mentioned agreements (the treaty does not assume to give greater rights) and the views expressed by this Government, with respect to the jurisdiction of the Chinese Eastern Railway, are equally applicable to the Southern Manchuria Branch as at present controlled. Moreover, by Article III of the Treaty of Portsmouth, Russia and Japan mutually agreed to “restore [Page 451]entirely and completely to the exclusive administration of China, all parts of Manchuria”, with the exception of that covered by the lease of the Liaotung Peninsula, and Russia specifically declared that it had no “territorial advantages or preferential or exclusive concessions in Manchuria of such nature as to impair the sovereignty of China or which are incompatible with the principle of equal opportunity ( Foreign Relations, 1905, Page 825.)

With respect to the rights in general of American citizens in the railway zone and the settlements therein, it may be stated that while this Government cannot admit that the Japanese authorities have any jurisdiction over such Americans or that their treaty rights and exterritorial privileges in China shall be in any way abridged, it considers it no more than equitable that American citizens residing within the settlements should contribute their reasonable share of any necessary municipal expenses. In the absence, however, of full information regarding the matter, the Department prefers not to express an opinion as to how such expenses should be raised or as to whether the levy of an income tax would, under the circumstances, be improper.

With respect to Paragraph 3 of your instruction No. 4300 regarding the arrest by Japanese police of American citizens found in the commission of a crime in a Japanese settlement, you are informed that while the statement that Japanese policemen acting in such a case would be exercising no unusual powers, is in itself unobjectionable from a legal standpoint and while this Government probably would not object to the arrest of American citizens under such circumstances, it considers that it would be inadvisable to make an admission of this kind to the Japanese authorities on account of the possible abuses to which such a privilege could easily be subjected.

It is to be understood that the foregoing observations do not apply to the leased territory on the Liaotung Peninsula which is understood to be under the jurisdiction of the Japanese Government.

I am [etc.]

Frank L. Polk
  1. J. V. A. MacMurray, Treaties and Agreements with and concerning China, 1894–1919, issued by the Carnegie Endowment for International Peace (2 vols., New York, Oxford University Press, 1921), vol. i, pp. 74 ff.
  2. MacMurray, Treaties and Agreements with and concerning China, 1894–1919, vol. i, pp. 154 ff.
  3. Ibid., pp. 119 ff.
  4. Omission indicated in the instruction.
  5. See Foreign Relations, 1910, pp. 202 ff.
  6. Ibid., p. 212.
  7. Ibid., 1905, pp. 824 ff.