The Acting Secretary of State to the Chargé in China ( Perkins )
Sir: The Department refers to the Legation’s telegram No. 930 of October 26, 1929,16 relating to the adjustment of debts owed by the Chinese Government to American citizens and organizations and to the presentation of claims by American citizens against that Government. In this telegram the Legation stated that it did not consider that circumstances were then advantageous for the presentation of American claims, but requested that the Department inform the Legation of the nature of the survey of outstanding accounts and claims which had been made by the Department.
The failure of the Department to receive any further advice in this connection from the Legation leads to the inference that the Legation is still of the opinion that circumstances do not favor an attempt to take up with the Chinese Government the adjustment of these outstanding debts and claims. However, the Department believes that it would be desirable that Mr. Nelson T. Johnson, American Minister, as soon after his assumption of office as may be practicable, give the matter his attention, with a view to possible early negotiations with the Chinese Government on this subject. The Department considers the matter pressing, not only because of certain rights in law and equity enjoyed by the American citizens involved, but also because in the course of any further delay the Chinese Government may hypothecate for other purposes revenues that might be devoted to the service of obligations to American citizens.
As of probable assistance to the American Minister in his consideration of the matter, the Department transmits herewith in duplicate a suggested protocol of agreement between the two Governments and a survey of the claims and complaints filed with it by American citizens.
It will be observed that the suggested protocol of agreement between the two Governments provides for the establishment of a tribunal for the examination and the adjudication of outstanding claims. This [Page 582] arrangement, which contemplates a single judge, or commissioner, to pass upon the claims, would, if adopted, conduce not only to economy of operation but would tend to the early completion of the work. It is not anticipated that any difficulty would be experienced in obtaining a commissioner thoroughly acceptable to both Governments.
The enclosed report of the survey made by the Department covering the period January 1, 1912, to January 10, 1929, inclusive,17 shows that there have been disclosed claims and complaints which might possibly contain elements upon which claims could be based, to the total number of 1,398, involving alleged damages or losses in the aggregate amount of $38,062,000. In this number, however, are 231 cases in which no amounts are given as to losses suffered. The amounts claimed, although in various currencies, have been reduced to the equivalent of the American dollar and where interest was not stated, that item has been omitted.
Doubtless there has been some duplication of cases in this report, but this has been unavoidable owing to the inability of the Department upon the basis of the records examined, to make a positive recheck of the cases. There are indications, also, of two or more sets of correspondence relating to the same case. Reports have been received since the completion of the survey as to further claims, and other cases will doubtless be reported.
In regard to the sufficiency of the survey, as that point might come up for consideration in connection with the negotiations with the Chinese Government for the working out of a satisfactory plan whereby the whole body of outstanding claims might be adjusted to the satisfaction of the two Governments and the claimants, the American Government, of course, would not contend that the survey has developed definitive bases as to the number and amount of bona fide claims, since a critical examination of the cases must disclose duplication, overlapping and, possibly, payments having been made in the case of certain claims. Moreover, some of the incidents have been regarded as possibly constituting a basis for claims which on development may prove to be insufficient.
The examination that has been made of the papers in the Department’s files in connection with this survey indicates that some of the claims would be based upon debts of the Chinese Government for supplies and materials furnished, some others grow out of alleged breach of contractual obligations of the Chinese Government, while still others are predicated upon some alleged tortious action of the Chinese Government. In a number of cases liability has been admitted by the Chinese Government and in some cases partial payments have been made. The debt claims alone amount approximately to $30,000,000. [Page 583] In the circumstances it might be contended that the liquidated claims, the debt claims, and the claims where liability has been admitted should preferably be disposed of through some debt funding arrangement, but the Department considers that even in such cases the settlement would better be made by the agency (preferably a commission) that is established to examine and adjudicate the tort claims. There would necessarily be some justiciable question in each case, and moreover, the settlement arrived at would be definitive.
If it should be discovered that the Chinese Government has itself prepared machinery for handling its outstanding debts and claims, such as the commission which was referred to in the Legation’s telegram No. 893 of October 16, 1929,18 the Department desires that the American Minister discuss the relative advisability of adopting the procedure devised by the Chinese Government and of making to the Chinese Government the proposal represented by the enclosed draft protocol of agreement. The Department would likewise be interested to learn whether other governments have taken or are seriously considering measures for the adjustment of the debts and claims of their citizens against the Chinese Government.
I am [etc.]