Memorandum by Mr. Walter A. Adams of the Division of Far Eastern Affairs

Below are offered some observations in regard to the question of undertaking at this time negotiations with China looking toward conclusion of a new treaty with China in which the United States would, inter alia, relinquish the extraterritorial rights which its nationals possess in China by virtue of existing treaties.

After nearly five years of war between China and Japan, Japanese military forces occupy a large part of China—that part in which is located a great preponderance of American investment and, in normal times, American population and trade and cultural interests.

China’s financial and economic structure is severely strained. Recent events in the Pacific area have given emphasis to China’s achievement in fighting stubbornly and avoiding annihilation of its armies in a long and unequal struggle. The United States on its part has assisted China in many ways; through purchase of silver, through loans, through Supplying war materials on a lend-lease basis, through a military aviation expeditionary force and lastly and recently through the extension of the enormous credit of $500,000,000 on terms which make the credit practically a gift.

In consequence of a growing realization in the United States of the magnitude of China’s achievement in resisting Japan, and in keeping with the American impulse of generous appreciation there is natural inclination in the United States to carry out at once all of the measures which can be thought of to express our feeling of appreciation. The writer has heard the expression “China has grown up”. There is a feeling that China should in all respects be treated as an equal.

On the other hand there is danger that action on the part of the United States toward expressing good-will and appreciation for China’s very notable effort may spill over the level of appropriateness and good taste to the detriment both of the interests of China and of [Page 269] the United States. There would in fact seem to be some evidence that this point may have already been reached. The American Ambassador to China in his telegram no. 176, March 1, noon, 1942,2 reported that the Chinese Ministry of Finance is disappointed to find that the recent huge credit made available to China by the United States was not granted as an absolute gift in recognition of China’s contribution to the war effort in general. The Ambassador reported that there is a perceptible assumption on the part of Chungking officials and bankers that the credit extended is compensation which was due to China for its past and present resistance to Japan and for what the Chinese regard as our past and present shortcomings. A prominent and intelligent Chinese banker was reported in the telegram under reference to have expressed the opinion that the credit extended by the United States to China was too easily obtained to be appreciated or for its most effective use to be insured.

In this connection there should be constantly borne in mind and (in the interest of healthy relations) upon appropriate occasions brought tactfully but plainly to the attention of responsible Chinese officials the facts that China has in its resistance to Japan been actuated solely by the instinct of self-preservation; that it was this instinct of self-preservation under the impact of events (and not any conscious purpose of assisting the United States) that has dictated China’s course of action; that the immediate cause of the involvement of the United States in the war was the refusal of the United States to sacrifice a principle involving China’s interests; that the interests of the United States render it desirable that China continue its struggle against Japan; and that this mutuality of interest is the only justification for expenditure by the United States Government of resources of the United States in assisting China in China’s struggle against Japan.

The most recent and most definitive assurances given by the United States to China in regard to the question of treaty revision was in a note dated May 31, 1941 addressed by the Secretary of State to Mr. Quo Tai-chi3 upon the occasion of the latter’s departure from the United States to assume the duties of Minister for Foreign Affairs at Chungking. In that letter the Secretary stated that the United States:

“… expects when conditions of peace again prevail to move rapidly, by processes of orderly negotiation and agreement with the Chinese Government, toward relinquishment of the last of certain rights of a special character which this country, together with other countries, has long possessed in China by virtue of agreements providing for extraterritorial jurisdiction and related practices.”

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No one can know at this time what conditions in China will be at the termination of the present war. Up until the renewed outbreak of hostilities in 1937 between China and Japan, China under General Chiang Kai-shek’s4 resolute leadership had made considerable progress toward unification. At that time, however, General Chiang was engaged in a controversy amounting to civil war with a large, organized “Communist” group. The outside military pressure exerted by Japan upon China a£ a whole has tended to keep the Chinese “Communists” and the leading faction in the country under Chiang’s control from open conflict with one another. After cessation of the present hostilities the pressure toward cooperation between dissenting groups will be removed and large parts of the country will probably be overrun by organized bands who are now known as “guerillas”. It will be surprising if there does not ensue a period of chaos in which the present government at Chungking or any other government which may emerge will in all probability be able to exert only partial and ineffective control.

Under the circumstances indicated in this memorandum it is believed that it would be prudent and wise to stand for the present upon the statement of the Secretary of State quoted above and to be guided by conditions which prevail in China and which affect relations between the United States and China at the termination of the present war. There is no popular demand at this time in China for the revision of the treaty relations between the United States and China and it is believed that initiative on our part now for such revision would not be healthy or appropriate but would be taken by China to indicate that we were “slopping over”.

On the other hand, it is obvious that the feeling amongst many influential Chinese is that extraterritoriality and other special foreign rights in China must go at the end of hostilities. The special status of the International Settlement at Shanghai will undoubtedly undergo modification or even abolition. The Chinese may very possibly demand the retrocession of Hong Kong (depending possibly upon the circumstances of Japanese ejection therefrom). Foreign shipping in Chinese coastal and inland waterways may be subjected to restrictions or may even be abolished.

The main point which the writer of this memorandum has in mind is that there is more to be lost than gained by abolishing extraterritoriality now and that revision of the treaties in force between the United States and China can more intelligently be undertaken after the termination of hostilities in the light of conditions then prevailing. In [Page 271] neither case may there reasonably be expected any impulse of gratitude on the part of the Chinese.5

  1. Post, p. 475.
  2. Foreign Relations, Japan, 1931–1941, vol. i, p. 929.
  3. Chiang Kai-shek, President of the Chinese Executive Yuan (Premier).
  4. The Adviser on Political Relations (Hornbeck) added the following comment: “In any case, we do not need to ‘play this card’ now, and we may have need for a card to play at some later date. SKH.”