The Secretary of State to President Coolidge

My Dear Mr. President: I have the honor to invite your attention at this time to the matter of the exercise of your authority in remitting to China the balance of the Boxer Indemnity. This remission is to be in accordance with the provisions of the Joint Resolution of May 21, 1924, (a copy of which is enclosed),90 at such times and in such manner as you shall deem just.

The steps heretofore taken are these: On June 14 the Department transmitted to the Chinese Minister in Washington a copy of the Joint Resolution. Mr. Sze then stated that his Government intended to intrust the administration of the funds to a Board which should be composed of Chinese and American citizens, to avail itself of the services of experts in working out the details of this arrangement, and, upon the formulation of a definite plan, to lay it before the Department for its consideration. In pursuance of this plan, Doctor Paul Monroe, Director of the Teachers College of Columbia University, proceeded to Peking last August at the instance of the Chinese Government, and held conferences with Chinese officials and educators. As a result of conclusions thereby reached, a Presidential Mandate was issued on September 17, creating the “China Foundation for the Promotion of Education and Culture,” and appointing nine Chinese and five American citizens members of the Foundation and trustees of the funds to be realized from the successive remissions of the balance of the Indemnity. It is my understanding that, by this action, the Chinese Government definitely divorced itself from any future control or supervision over the funds of the Indemnity, surrendering the authority, which it would otherwise normally exercise, to the Foundation, which, under the terms of its constitution is a self-perpetuating body.

While not undertaking to give formal approval to the measures which the Chinese Government has thus far adopted, the Department has made known to the Minister of Foreign Affairs that it perceived no objection to the personnel of the Board of Trustees. Before, however, venturing to recommend to you affirmative action on this matter, it has seemed to me highly desirable, and perhaps essential, that this Government should receive some reasonably definite statement as to the general purposes to which the Foundation contemplates devoting the Indemnity funds. While appreciating that the determination of the specific uses of the funds within its control will perhaps form the most important function of the Board of [Page 558] Trustees, and not desiring inappropriately to circumscribe its latitude of action, I have felt that this Government might subject itself to criticism, were it not to require some such statement as I have indicated, in order that there may be an assurance that the funds will actually be expended in conformity with the intent of the Congress. With a view to providing a satisfactory formula, there has been informally suggested to me the following Resolution:

“That the Board of Trustees of the China Foundation for the promotion of Education and Culture resolves that the released Boxer Indemnity funds shall be used for the promotion of scientific study, for the application of modern science to the specific needs of China, and for the training of individuals and the conduct of experiment, either individual or group, for the application of modern science to the specific conditions of China.”

The language of this resolution appears to me quite satisfactory, but before proceeding further with respect to this question I should like to have your views. Should the course suggested meet with your approval, I shall be glad to take such further action as will, within the near future, I hope, enable the Department formally to submit to you its recommendations.

There are certain other facts in our relations with China, which, although not directly connected with the question of the remission of the Indemnity, nevertheless seem to me to deserve consideration simultaneously. There have been within the last few years numerous instances in China of assaults and depredations by Chinese bandits and soldiers upon the persons and property of American citizens. In a majority of these cases, the Department has had reason to hold that the outrages, as well as the failure to take steps properly to punish those guilty of them, were due to the negligence of the Chinese Government; and, as a result, numerous claims for damages have been presented to that Government, a large portion of which remain unsatisfied.

I also regret to be obliged to bring to your attention the further fact that, in order to tide over financial emergencies in the last few years in connection with the maintenance of Chinese students in this country, representatives of the Chinese Government in Washington have borrowed from local banks amounts aggregating approximately $180,000, which sums, although long overdue, have not as yet been repaid. These banks have sought to have a sufficient sum to cover these obligations retained from any funds that may be remitted to China. The Department has, however, taken the position that these loans, from a strictly legal point of view, are on the same basis as any other financial obligation of the Chinese Government to American citizens, and that it could not recommend the action desired by the banks without, at the same time, discriminating [Page 559] against numerous American creditors of the Chinese Government, the total of whose overdue obligations far exceeds the amount involved in the remission of the Indemnity.

In both of the above classes of claims against the Chinese Government, I am, however, of the opinion that not only a legal, but a particular moral, obligation rests upon the Chinese Government to pay those American citizens whose interests are suffering by reason of a failure to liquidate their just claims. At the moment this Government is demonstrating its friendship for China by the return of the Indemnity, it would seem peculiarly fitting for the Government of that country to make an endeavor to satisfy these claims.

I therefore propose, if it meets with your approval to make these views known to the Chinese Government in such manner as may seem most appropriate for the purpose of bringing those now in authority in that country to a realization of the peculiar obligation resting upon the Chinese Government promptly to meet its commitments to American citizens of the character which I have described.

Faithfully yours,

Charles E. Hughes
  1. Ante, p. 554.