493.11/961: Telegram

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

40. Your 18, January 18, 3 p.m.

As regards the policy of remitting to China the remainder of Boxer Indemnity permit me to say at once that I have been and am strongly in favor of it. This also the sentiment of overwhelming majority of Americans in China. In view of all the past American legislation and of utterances official and unofficial the Chinese also expect it though the Chinese Government has refrained from any allusion to the subject.
A practical difficulty at the present time is that there is no agency to receive the funds representing the Chinese people as a whole for whose benefit remission would be made here. From onethird to one-half of the provinces are independent of Peking Government. People of these provinces would have just ground for complaint if the benefits of the returned funds were monopolized by the rival if larger group of provinces which accept the Peking Government.
Another practical difficulty is that Peking Government is in desperate financial straits. It cannot collect taxes, yet military governors of the provinces and the other military commanders insist that it shall make them appropriations for their forces which are practically personal armies. Politicians too get public funds for their own purposes. If in these circumstances the remainder of the, indemnity funds were liberated for the uncontrolled use of the Peking Government at the present time they would quickly disappear through these military and political channels greatly to the injury of the Chinese people. Both Chinese and Americans would however oppose an unconditional grant of the balance of the Boxer Indemnity funds to the Peking Government.
The time is inopportune for the enactment of the proposed legislation. Not only does the Chinese Government persist in its refusal to pay loans and debts to American citizens, not only were American ships engaged in lawful traffic last season on the Yangtze fired on, but today American treaty rights in regard to trade and commerce are violated in several provinces and 6 American missionaries within the last 60 days have been attacked or carried off or murdered by bandits or soldiers. Against these enormities the American Government has protested. The display at this juncture of the generosity and friendship towards China contemplated in the joint resolution introduced in the Senate December 6, 1923, could [Page 553] not fail seriously to weaken the force of these protests both with the Chinese Government and the Chinese public opinion.
If the passage of the joint resolution involves the relinquishment by the United States of the position it has maintained in relation to the Chinese Maritime Customs since the indemnity was imposed upon China in 1901, I should consider this result under existing conditions in China gravely detrimental to Chinese interests. China must soon face the great issues of unification, stabilization of government, financial rehabilitation, disbandment of troops, etc., and she will need the help of America. Until these questions are disposed of America, should not either in her own interest or in the interest of China part with any of the leverage she now enjoys in common with other nations. In comparison with the British, French and Japanese our diplomatic position has already been impaired by our nonparticipation in the control of the salt revenues. To turn over to these nations the power and influence we now share with them in connection with the customs revenues would be a fatal mistake.
There is an inherent difficulty in combining with an unconditional act of grace like the remission of the remainder of the indemnity some stipulation or at least understanding with regard to the uses to which the funds shall be put. Though it was overcome in 1908 it would be much more difficult to overcome today in a divided China with an impotent government and a racially self-conscious people. Yet the great majority of Americans in China and practically all thoughtful Chinese insist on this feature as an essential part of the program for the remission of the remainder of the indemnity. This is therefore an additional consideration in favor of delay.
In connection with this subject I have the honor to refer to my despatch number 1793 dated August 29, 1923.83
Warmly as I support the policy of remitting the indemnity I am of the opinion for the reasons set forth that the best interests both of the United States and of China demand that for the present the matter should be left in statu quo and that American guardianship of the funds should continue unimpaired.
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