493.11/1823
Memorandum by the Minister in China (Johnson) of a Conversation With the Chinese Minister of Finance (Kung)34
Mr. Johnson remarked that he had that morning sent to Dr. Kung a copy of a note he addressed to the Minister for Foreign Affairs on January 20, 1933,33 with its enclosure, a draft of a Convention35 between the United States and China establishing a joint Claims Commission to pass upon claims against either of the Governments filed by nationals of the other country.
Dr. Kung said that he had received Mr. Johnson’s communication but had not had time to study the draft thoroughly.
Mr. Johnson said that the Department of State regarded the signing of a Convention of this sort as extremely important, although it was quite prepared to take into consideration any counter-suggestion or different proposal to achieve the same object which the Chinese Government might care to offer. There followed this opening a rather lengthy discussion of the proposal, the gist of which discussion follows:
[Page 658]Dr. Kung said that the Chinese Government would be quite prepared to enter into an arrangement of this sort with the American Government, if it could be viewed as a single project. Speaking confidentially, however, Dr. Kung admitted to Mr. Johnson that the Chinese Government was apprehensive, if this were done, that a demand would be received from the Japanese Government to set up a similar commission to take care of Chinese-Japanese debts. Dr. Kung said that his Government would be willing to enter into this arrangement with the American Government, provided it did not entail similar action with other governments, say the Japanese and the French, because in the case of the United States it would be an “agreement between gentlemen”, but the Chinese Government anticipated that if such an arrangement were entered into with the Japanese Government, the latter would bring up all sorts of doubtful financial transactions, for example, alleged deals with Chang Tso-lin in the old days, the very existence of which might be unknown to the Chinese Government. Dr. Kung said he was not entirely confident what the French might do, but in the case of Japan, a nation which had violated so glaringly the rules of international morality, the Chinese Government had good grounds for fearing that a procedure of this sort would lead it into all kinds of trouble.
Dr. Kung inquired whether the Commission proposed by the American Government might not be limited in scope to the handling of “private claims”.
Mr. Johnson replied that the American Government would have no objection to the setting up by China of similar Claims Commissions by China and other governments, but the Department of State would not favor one international Claims Commission to handle all claims, because the American Government did not wish the American claims to be mixed up with Japanese claims.
Mr. Johnson recalled that when, under his instructions, Mr. Peck presented to the Foreign Office the note of January 20, 1933, the idea had been received with approval by the Minister for Foreign Affairs and by Dr. Wang Ching-wei, President of the Executive Yuan. Later on some authorities of the Chinese Government had interposed objections and no reply to this note had been sent, although nearly one year had elapsed.
Dr. Kung said he could not see why the American claims could not be taken up through ordinary diplomatic channels. He said he did not, himself, know what these American claims were and he asked Mr. Johnson to send him a list of such claims, both for consideration in connection with the present proposal and also because [Page 659] he thought it possible that he might be able to bring about the settlement of many of these claims. Certainly, he would do his best.
Mr. Johnson said that it was precisely with the object of taking these claims out of the field of ordinary diplomatic negotiations that the American Government had made the present proposal. Mr. Johnson said that he was never able to come to Nanking without some troublesome claim demanding attention. This sort of thing, he said, made for friction and was not a proper subject for negotiation diplomatically. Matters of this sort should be handled by a specially qualified, technical organization.
Mr. Peck interposed that, so far as he understood, the opinion was held by the Department of State that if China took steps to deal with its foreign indebtedness, through measures like the one now proposed, many hostile critics of China would be silenced. Mr. Johnson confirmed Mr. Peck’s observation.
Mr. Johnson pointed out to Dr. Kung that the proposed Convention did not specify either the time or the manner of payment of such claims as should be approved by the Claims Commission. These points could be left to subsequent determination. The object of setting up a Claims Commission was to provide facilities for handling claims before the witnesses and evidence should disappear or become confused. The American Government desired that the claimants should “have their day in court”, an opportunity which is now not open to them. Mr. Johnson said that when this idea had first been broached, while Dr. C. T. Wang was Minister for Foreign Affairs, the Chinese Government had made certain criticisms, for example, that the proposal was one-sided, in that it contemplated claims against the Chinese Government, but not against the American Government. The draft had then been revised and these objections had been met. Mr. Johnson expressed the view that since, as now proposed, the Commission would contain representatives of each Government, with a third member approved by both, and would entertain claims against both Governments, it was eminently fair to both parties.
Mr. Peck asked the permission of Mr. Johnson to point out, also, that the draft Convention contained a stipulation that claims based upon contracts with the Chinese Government might be taken out of the purview of the Commission, provided that arrangements were made for handling such contractual claims approved by the American Government.
Dr. Kung said that he would give the matter his immediate and serious attention. He again asked that he be supplied with a list of the claims now outstanding. Mr. Johnson urged that some sort of counter-suggestion, or at least a reply, be made in response to the note of last January.
- The Counselor of Legation, Willys R. Peck, was also present. A copy of this memorandum was transmitted to the Department by the Minister in China in his despatch No. 2424, December 20; received January 15, 1934.↩
- Not printed.↩
- Foreign Relations, 1931, vol. iii, p. 1043.↩