493.11/2226: Telegram

The Consul General at Shanghai (Gauss) to the Secretary of State

82. The Consulate General has received letter from C. R. Bennett, Joint Treasurer of China Foundation for Promotion of Education and Culture, pointing out that suspension of payments by the Chinese Government of Boxer indemnities will have extremely serious effect on activities of the Foundation. Letter states that all of Foundation’s educational work in China and support of research professors abroad [Page 811]is from indemnity remissions and that amount appropriated for these activities for current fiscal year is $1,800,000 Chinese currency. To carry out specific projects assistance has been pledged to a limited extent in the future. Income from endowment fund would produce only about 25% of above amount.

Letter appeals for all possible efforts to be made in order that payment of the indemnity may be continued and states that endowment fund amounts to about $10,000,000 Chinese currency which cannot be used for current expenses and grants without constitutional amendment. Under present conditions it is stated that it would be virtually impossible to convene sufficient trustees to enact such an amendment.

Concerning first remission which goes to support Tsinghua University and graduate students in America letter states that default would be equally serious as one of the conditions under which Tsinghua endowment fund was transferred to trusteeship of China Foundation was that endowment fund should be kept intact as a permanent endowment and that income from the endowment should not be available for current expenses until termination of indemnity period in 1941. Tsinghua annual budget is $1,200,000 Chinese currency and $60,000 United States currency.

Letter states that suspension of indemnity payments will leave Tsinghua University without any support and the China Foundation with about $400,000 Chinese currency with commitments of about four times that amount if present program is to be carried out.

Letter concludes by stating that Foundation may admit that threat to its finances does not come through any act of American Government but on assumption that some action will be taken concerning the decision of the Chinese Government it is decided to inform the American authorities of the seriousness of situation which may soon confront Board of Trustees.

Copy of letter has been mailed to the Department, Chungking and Peiping.