The Ambassador in China (Johnson) to the Secretary of State

No. 353

Sir: I have the honor to refer to the Legation’s despatch No. 3557 of May 10, 1935,25 with reference to the question of the re-registration of land titles at Nanking. This question has arisen specifically in reference to the re-registration of land titles to property belonging to several missionary societies who own and use land in Nanking. But it is of wider import, because the Embassy is convinced that the attitude of the municipal authorities at Nanking represents the attitude of the National Government and may be expected to be applied to the question of the use and ownership of land by American citizens throughout the territory of China. The Embassy has not yet received a reply to its communication addressed to the Chinese Foreign Office under date of April 26, 1935, (copy of which was enclosed with the Legation’s despatch above referred to23), but a number of developments have occurred which indicate that the Nanking Municipality continues to maintain the policy in regard to land holding by American missionary societies which was objected to in the Legation’s note to the Foreign Office of April 26, 1935.

[Page 655]

I enclose a memorandum handed to Mr. Atcheson26 at Nanking on March 7, 1936,27 by Mr. Blackburn28 of the British Embassy, which quotes an extract from the North China Daily News dated February 25, 1936, purporting to describe a form for the lease of land for use by foreign missions or residents at Nanking. This newspaper item contained the following statement:

“When the lessee no longer wishes to continue a lease, the property may be taken back by the Land Bureau at its assessed value.”

[Here follow extracts from the British memorandum.]

Under date of March 13 the Embassy suggested to the Consulate General at Shanghai, under whose jurisdiction Nanking land matters now belong, that formal notice of this Government’s attitude to the Mayor at Nanking was in order, in view of an item which appeared in the Central Daily News of February 24, 1936, which was apparently similar to the one referred to in Mr. Blackburn’s memorandum above quoted. A copy of this despatch is enclosed.27

On March 19 the American Consul General at Shanghai despatched a note to the Mayor at Nanking along the lines suggested by the Embassy. Copy of that note with covering despatch No. 84 of March 19, 1936, to the Embassy from the Consulate General at Shanghai is enclosed herewith.27 In this connection the Consul General at Shanghai brought up an interesting question, namely, as to what effect the enforcement of the Land Law and the Law for the Enforcement of the Land Law as from March 1, 1936, would have upon such measures as those apparently proposed by the Municipality at Nanking. The Consul General pointed out that the Land Law required that land in China be registered or re-registered under the provisions of that law. The Consul General stated:

“But an examination of the pertinent sections of the Land Law and the Law for the Enforcement of the Land Law failed to disclose any stipulation curtailing the right of owners or lessees of land to dispose freely of their holdings, nor that such land be required to be surrendered to the Chinese Government except by expropriation. In such circumstances, apart from the question of unilateral treaty abrogation, it is not discerned just how the Nanking Municipal Government can enact municipal land regulations that appear to be contrary to the Land Laws of the National Government.”

Under date of March 27, 1936, Mr. Peck, Counselor of this Embassy, made certain comments upon the observations of the Consulate General at Shanghai in regard to the effect of the Land Law and the Law for the Enforcement of the Land Law upon such regulations [Page 656] as might be issued by the Municipality at Nanking in regard to the re-registration of land. A copy of these comments is enclosed for the information of the Department.30

I feel that Mr. Peck’s comments in this regard are important and deserve serious consideration. In general he points out that the Chinese have taken the position that the system of “perpetual lease” is a legal anomaly based originally on the theory that the Emperor of China was the lord of the soil and that as a consequence the Chinese Government at the time when the treaties were negotiated was unwilling to grant title to real property to foreigners who were not under the jurisdiction of the Government. He follows this statement by saying that if this explanation is sound the Chinese would doubtless insist that the reversionary right and ownership vests in the Chinese Government, or a subdivision thereof, since the original owner or lessor divested himself of his own right in perpetuity.

I have not had time to explore all of the records for the purpose of determining just how and when the term “perpetual lease” came into use in regard to the holding of property by foreigners in China. The first use of the term in a treaty occurs, I believe, in Article 14 of the Treaty of October 8, 1903, between the United States and China,31 and it has generally been used in all title deeds covering land acquired by American citizens and juridical persons since that time, although I remember, in a somewhat extended experience with Chinese title deeds to land acquired by American citizens, to have seen occasionally the term “sale” used, which I believed was an inadvertence. Title deeds to property owned by Chinese are fee simple deeds, the term “perpetual lease” only coming into use when the property passes from Chinese hands into foreign hands. I have always supposed that the term “perpetual lease” was a legal device for getting around the theory that foreigners might not own Chinese land in fee simple and was not intended to estop a holder of such title of disposing of it at will, for in the past, in so far as I have been aware, no objection has been made by the Chinese authorities when foreigners have desired to dispose of their perpetual lease by sale at the current value of property held in fee simple. I am of course aware that, since 1903 at least, property purchased by missionaries in the interior has in practice always been described in the perpetual lease as “kung ch’an”, or “common property”, to indicate, as I have always assumed, that the property was the common property of the mission or the juridical person named in the deed, and not the property of an individual.

The theory that the Emperor was lord of the soil in China is a theory of ancient standing in China. All land not registered as the [Page 657] property of an individual is presumed to be the common property of the Emperor or the Government. This is evidenced by the methods used when an individual desired to obtain title to foreshore accretions, or hitherto uncultivated forest or mountain land. Evidence of occupation, use or ownership was by title deed and payment of the land tax, and under ancient practice an individual could obtain a prescriptive right to land after thirty years’ unquestioned payment of taxes. It is possible, of course, that the taxes were looked upon as rent paid to the lord of the soil, thus supporting the idea that the user of soil was a lessor under the Emperor and not an owner in fee simple.

The point, however, is that the only title which an American citizen can obtain for land in China is in the form of a perpetual lease. This is recognized by Article 14 of the Treaty of October 8, 1903, between the United States and China. The difficulty that faces American citizens, and, in the case under discussion, specifically American missionary societies, concerns their right to transfer property so held. For the position of the Chinese Government now is that if a lessee in perpetuity, specifically an American missionary society, no longer desires to exercise its right to use the property “for missionary purposes”, as stipulated under Article 14 of the Treaty of October 8, 1903, the property must revert to the Government, which has replaced the Emperor as the lord of the soil. Mr. Peck states:

“It will be noted that Article 33 of the Land Law definitely provides for the acquisition, establishment, transfer, modification or extinction of the right of perpetual lease. Article 117 of the same Law prescribes what data shall be supplied in the application form. In the Law for the Enforcement of the Land Law, Article 10 specifically refers to treaty stipulations granting rights to foreigners, but Article 31 makes clear the position now taken by the Chinese Government toward perpetual leases held by foreign persons and institutions. Article 31 states that land leased to foreigners in accordance with the treaties must be registered as ‘public land’, although it provides that the lessee shall be responsible for taxes and ‘all the other requisite obligations of owners’.”

To give point to this attitude on the part of the Municipal Government at Nanking, Mr. Peck refers to the case of Mr. James H. McCallum which is covered in a copy of a letter addressed by Mr. Atcheson to the Director of the Department of European and American affairs of the Ministry of Foreign Affairs, Dr. Liu, under date of March 26, 1936, enclosed with this despatch.32 Mr. McCallum received from the Municipal Government at Nanking a notice which he was instructed to hang at the entrance to certain property owned by [Page 658] the United Christian Missionary Society. This notice stated that as the time limit for the registration of the property in question had expired, the property would be regarded as ownerless. The notice invited any person who had claim to any cadastral rights over the land in question to raise objection to the registration, in default of which the land was to be given “hypothetical registration” (chia ting teng chi) by the Land Administration. An interesting point is that the notice, in describing the boundaries of the land in question, states that the property extends “south to municipal land” and “west to municipal land”. Now, the “municipal land” referred to as bounding this property on the south and west is land leased in perpetuity by the University of Nanking, an American juridical person. As Mr. Peck points out, the phraseology used in the notice is clearly dictated by Article 31 of the Law to Enforce the Land Law.

Mr. Peck states in conclusion:

“Summed up, the situation seems to be that the two laws in question do actually seek to give effect to the treaties by permitting foreigners to acquire, establish and even transfer rights of perpetual lease. There seems to be no question, therefore, but that an American missionary organization would be allowed under the Law to transfer its perpetual lease to another person or organization permitted under the treaties to hold a perpetual lease. This would seem to follow, in any event, from the right to ‘establish’ the right of perpetual lease.

“Certain questions arise, however, from the requirement of the Law that property leased in perpetuity shall be registered as ‘public land’, e. g. in the case of the United Christian Missionary Society property as ‘Municipal Land’. If the lessees may dispose of their property only by transferring their leases to other organizations entitled to acquire perpetual leases, it is clear that there will be, practically speaking, no such thing as a market value for such property. There have been indications that it is the wish of the Chinese authorities that land held by foreign organizations under perpetual lease, especially land inside the city of Nanking shall revert to Chinese ownership as soon as possible. Consequently, it may be that the municipal authorities would permit Chinese to purchase such land and would register their titles. On the other hand, the land being recorded as ‘Municipal Land’ there may be formalities which would preclude transfers in this manner. If the lessees elect to avail themselves of the privilege, now reported, of surrendering their property to the Municipal Government, what will be the basis of appraising its value?”

Mr. Peck states that the question which chiefly concerns American missionary organizations here is the question of their right to dispose of their property at its market value, and he asks that he be authorized to ask the Ministry of Foreign Affairs in writing to reply to the following questions: [Page 659]

  • “(1) Is it the intention of the Chinese authorities, under the new procedure, to permit American missionary organizations and other persons and organizations authorized to hold property under perpetual lease, to sell or lease their property to any persons or organizations, Chinese or foreign, who may wish to purchase or lease it?
  • “(2) Will such purchasers or lessees be given, without impediment, certificates of ownership or lease, as the case may be?”

These were the questions which we put to the Foreign Office in the Legation’s note of April 26, 1935, and instead of putting these questions in the way that Mr. Peck has put them, I am addressing a note to the Foreign Office requesting a reply at an early date to the Embassy’s note of April 26, 1935. A copy of my note of today’s date is enclosed.34 In the meantime, however, the Embassy will appreciate some expression of opinion from the Department as to the evident interpretation which the Chinese Government seeks to place upon Article 14 of the Treaty of October 8, 1903, between the United States and China, which article appears specifically to limit the right of missionaries and missionary societies to acquire land for missionary purposes only. More specifically, would this article in the opinion of the Department estop an American missionary organization from disposing of its land to a Chinese for purposes other than missionary and at the current market value of land held in fee simple?

Respectfully yours,

Nelson Trusler Johnson
  1. Foreign Relations, 1935, vol. iii, p. 809.
  2. Not printed.
  3. George Atcheson, Jr., Second Secretary of Embassy in China at Nanking.
  4. Not printed.
  5. A. D. Blackburn Chinese Secretary of the British Embassy in China at Peiping.
  6. Not printed.
  7. Not printed.
  8. Not printed.
  9. Signed at Shanghai, October 8, 1903; Foreign Relations, 1903, p. 91.
  10. Not printed.
  11. Not printed.