The Minister in China ( Crane ) to the Secretary of State

No. 1168

Sir: Referring to the administration of the ex-German and Austrian concessions at Tientsin and Hankow, the Legation has the honor to recall that with its despatch No. 1508, of May 28, 1917, File 851–810.2,40 with which was enclosed a copy of an instruction of [to] the Consul General at Tientsin on the subject of taxes in the ex-German Concession, the following comment was made:

“In taking over the administration of the German Concessions at Tientsin and Hankow, the Chinese Government did not attempt to reconstitute the several municipal organizations, but (no doubt wisely in the interests of the municipalities) caused the existing organizations to continue their functions under the authority and supervision of the Bureaus appointed for the purpose by the Chinese Government. There is reason to believe that this arrangement is more satisfactory to property holders and lessees in those Concessions than an attempt to institute direct Chinese administration.”

Unsatisfactory as was the administration of these areas at first it was made more so by the issuance of certain regulations under date of December 29, 1919, providing for various procedures relating to taxes, etc. connected with land transactions in the ex-concessions and with land formerly enemy-owned outside the limits thereof. [Page 971] Translations of these regulations are to be found under cover of despatch No. 29 of January 19, 1920, and No. 80 of March 5, 1920, from the Consulate General at Tientsin to the Legation, copies of which are among the enclosures hereto.41 Extensive negotiations took place between the Chinese and foreign local representatives and between the Diplomatic Body and the Chinese Foreign Office in an effort to remedy the more glaring defects of these regulations but no substantial progress was made, and the matter has now been further complicated by the issuance of another set of regulations under date of December 19, 1920, a translation of which was enclosed with a despatch dated January 17, 1921, from the Consulate General at Tientsin to the Legation, a copy of which was sent to the Department direct.41

For the purpose of completing the Department’s files in regard to this subject, and in order to show the manner in which the Chinese authorities have attempted to encroach upon the rights hitherto enjoyed by residents in these concessions, in contravention of Article 132 of the Paris Treaty of Peace in which the Chinese representatives authorized a declaration that the restoration to China of the full exercise of her sovereign rights in these areas would not affect the property rights of the nationals of the allied and associated Powers who are holders of property in these concessions, the Legation has the honor to enclose copies of various documents relating to the subject in interest.41 It is recognized that the Treaty undertaking quoted above applies as yet only to the Austrian Concession, but the Legation understands that a separate agreement to the same effect was given by the Chinese Government in 1917, and an attempt will be made to secure and remit a copy of the same to the Department.

The new regulations have formed the subject of discussions at meetings of the Diplomatic Body, which sympathizes with the Consular Body at Tientsin in feeling that the manner in which the control of the ex-concessions is taken entirely away from the residents and placed in the hands of appointed officials in all that regards actual power is not only a breach of faith on the part of the Chinese Government but is entirely impracticable from the standpoint of the welfare of the concessions themselves. The Diplomatic Body appointed representatives from the Legations of the other nations possessing concessions in Tientsin to negotiate in an informal way with the Foreign Office representatives in order to ascertain whether any more satisfactory settlement could be evolved.

While it will serve no purpose to recount the progress of these informal discussions the Legation desires to state that the representatives [Page 972] of the Legations concerned, with whom on behalf of American citizens this Legation will perforce associate itself, have drawn up a tentative plan of organization whereby a municipal council elected in the usual manner would have effective control of financial and executive functions in the concessions including the police, but acting under the chairmanship of an official appointed by the Chinese Government. This scheme has been demonstrated by past experience to be workable and just to all concerned, but it is quite at variance with the regulations of December 19, 1920, and there appear to be only slender grounds of a conventional sort upon which to press for its acceptance.

Large American financial interests, both actual and potential, depend upon suitable organizations being instituted in the three concessions concerned and their [there] exists a great probability that a direct effect may be felt in the municipal organizations in the ex-Russian Concessions. The matter is therefore of great moment to American interests, and the Legation respectfully requests the Department’s instructions as to the length to which it may go in joining other nationalities in pressing for the creation of effective municipal governments in these ex-concessions. It is understood as a matter of course that treaty provisions in regard to residence at treaty ports and the ownership of land thereat in no case may be diminished.

I have [etc.]

(For the Minister)
A. B. Ruddock
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