493.11N15/292: Telegram

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

57. Your number 83, February 2, 5 p.m. Sino-American Commission.

Department approves your instructions to American Commissioners in regard to the Government claim.
Telegraphic instructions regarding Hobart57 Claim and custody of Commission records and claims sent by Department to American Commissioners care American Consulate General, Shanghai, January 28.58
In the agreement for the settlement of the Nanking claims the Chinese Government undertook to make “compensation in full for all personal injuries and material damages.” Obviously any settlement which does not take into account the lapse of time between the date the loss or injury was suffered and the date of payment can not constitute “full compensation” and would not conform to the agreement. Moreover, the Chinese are in error in asserting as a precedent that interest was waived in regard to the 1911 claims. On August 25, 1914, the Wai Chiao Pu agreed to the payment of interest on such claims at the rate of 5 percent, to be calculated from August 26, 1913, the date of the signature of the Reorganization Loan. See your despatch No. 367 of September 12, 1914.59 The Department suggests as a basic date for the imposition of interest on the Nanking claims and as a compromise of the matter the date of the Nanking agreement, namely March 30, 1928.60

Instruct American Commissioners to reopen discussion of interest question in the sense of the foregoing and to inform Chinese commissioners that if the matter can not be adjusted between the two Governments, it will be necessary to consider submitting the question to a neutral arbitrator as contemplated by the agreement. You may, in your discretion, also take up matter directly with Foreign Office in an effort to have fresh instructions issued to Chinese commissioners to accept principle that imposition of interest was contemplated by the agreement.

  1. Earle T. Hobart, formerly Nanking manager of Standard Oil Co.
  2. Not printed.
  3. Foreign Relations, 1914, p. 94.
  4. See telegram of March 30, 1928, from the Minister in China, ibid., 1928, vol. ii, p. 331.