893.51/4925: Telegram
The Minister in China (MacMurray) to the Secretary of State
Peking, June 8,
1926—9 a.m.
[Received June 8—9:25 a.m.]
[Received June 8—9:25 a.m.]
242. Your telegram 114, June 4, 8 p.m.
- 1.
- Although it be conceded that holders of foreign obligations antedating consolidation of internal loans in 1921 are morally entitled to priority of payment out of customs revenues, and although legations of nationalities so concerned have been fully warranted in continuously urging upon Chinese Government equities of such claims, it is nevertheless the fact that the obligation is one of good faith rather than of law and that creditors in question have in fact no lien whatsoever upon customs funds. An appreciation this situation seems implicit in personal letters which Lamont and Cochran have addressed to Strawn in connection with their interests and which he had felt at liberty to show me.
- 2.
- The principle laid down in the Department’s telegram number 3, January 5, 5 p.m., 192125 (see also enclosures 1 and 3, Legation’s despatch 832, February 15, 192126) is that 1912 agreement merely enables diplomatic body (now the interested Ministers) to assure service of specified loans and indemnities and (since the cancelation of clause 6 on April 7, 1913; see MacMurray’s Treaties, page 947) rests in them no discretion to withhold or otherwise to deal with any balance of customs funds accruing to the Chinese Government; the agreement does not even require the Chinese Government to make application to diplomatic body for releases of such balances, although that practice has doubtless properly been followed with a view to enabling a [the] diplomatic body to verify the existence of funds adequate to meet the specified services while certain nationalities have till recently taken a contrary view and caused the diplomatic body to withhold assent to various requests for releases. The contention of our Government has been that it was solely with a view to meeting this limited purpose that the diplomatic body is entrusted with a degree of supervision over the funds which is obviously of a purely fiduciary character and on the principle originally laid down by the Department’s instruction above quoted and now accepted by all other nationalities. Neither my colleagues nor I consider that the recent request of the Chinese Government for a release of customs funds could have been declined or made conditional upon the satisfaction of unrelated claims without abuse of their fiduciary relationship to these funds.
MacMurray
- Foreign Relations, 1921, vol. i, p. 494.↩
- Not printed.↩