Memorandum by the Chief of the Division of Far Eastern Affairs (Hamilton)

The question whether the Government of the United States should at this time take an initiative toward entering into negotiations with the Chinese Government for the conclusion of a new, standard treaty in which the United States would, inter alia, relinquish the extraterritorial and other special related rights which its nationals possess in China by virtue of existing treaties involves many considerations pro and many considerations contra.

Among the principal considerations contra there may be mentioned the following:

This Government has, comparatively recently, informed the Chinese Government of its readiness to move rapidly, when conditions of peace again prevail, toward relinquishment of the extraterritorial and other special rights which this country has long possessed in China (letter from the Secretary of State of May 31, 1941, to the Appointed Chinese Minister for Foreign Affairs6).
Readiness of this Government to relinquish rights which its citizens cannot, because of Japanese military occupation of Chinese territory, now exercise in fact in the principal centers of American population in China would undoubtedly be seized upon by the enemy as a basis for charging that this Government’s action was nothing but a gesture conceived in and manifesting weakness.
Information from the American Embassy at Chungking and from the representatives there of the Coordinator of Information indicates that the Chinese Government and people are more interested in military deeds and accomplishments than in words and diplomatic phrases; also, that the United States may have given somewhat too great prominence during recent months to words, especially utterances tending to cause the Chinese to be satisfied with what they have done and to draw unfavorable comparisons between their deeds and the deeds of their allies.
When the war is over there will undoubtedly be a period of unsettled conditions in China during which time there may be special [Page 272] need for American nationals to have the protection accorded by extraterritorial and other related rights.
When the war is over there will be some things which this Government will wish to have the Chinese Government do. Retention until that time of extraterritorial and other related rights will give this Government a bargaining factor of some importance.
When this country endeavors to negotiate a new, standard treaty with China, there will undoubtedly come up very troublesome questions relating to the question of real property rights. This Government will presumably desire to obtain for American nationals the right to hold real property throughout China. Many of our state laws forbid the holding of real property by Chinese nationals. A formula on this subject was worked out in the treaty with Thailand, signed November 13, 1937,7 Article 1 (seventh paragraph). That provision reads as follows:

“In all that relates to the acquisition, possession and disposition of immovable property the nationals, including corporations, partnerships, associations and other legal entities of each High Contracting Party shall in the territory of the other High Contracting Party be subject exclusively to the applicable laws of the situs of such immovable property. The applicable laws of the situs of immovable property as herein used shall in reference to the nationals of Siam be understood and construed to mean the laws applicable to immovable property of the state, territory or possession of the United States of America in which such immovable property is situate; and nothing herein shall be construed to change, affect or abrogate the laws applicable to immovable property of any state, territory or possession of the United States of America.”

Whether the Chinese Government, in its present mood, would accept such a provision is uncertain.
It is probable that present hostilities will continue for some time and that many changes of many categories will take place during that period, some of which changes probably no one can foresee. A new treaty concluded at this time might be outmoded and inappropriate to the situation obtaining at the conclusion of hostilities.

In the attached memorandum of March 19,8 Mr. Adams reaches the conclusion “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”.

Among the principal considerations pro there may be mentioned the following: [Page 273]

In this country there is coming more and more to the forefront the idea that the present war is a people’s war; that the United States and the United Nations are fighting not only for self-preservation but also for human rights and decencies and for greater equalities in the general political, economic and social system than have heretofore prevailed. For years the American people have regarded extraterritoriality and its related appurtenances as an anachronism. This anachronism becomes more vivid against the background of a growing popular conception of what we are fighting for. Relinquishment of extraterritorial and other special rights would thus be in line with and a manifestation of the war aims of the United Nations.
The Chinese are keen bargainers. They realize the attitude of the American people as a whole toward retention of American extraterritorial rights in China. Consequently, retention of such rights until after hostilities cease would not be likely to constitute for this Government a bargaining factor of significance.
As a result of war conditions in China, the normal activities of most Americans, at least in the principal centers of population (which are under Japanese military occupation), have had to cease. Those Americans, at least those who have left China or who will be able to leave China, are making and will have to make readjustments in their occupations. The extraterritorial system is bound to go. There will undoubtedly be, after termination of hostilities, a period of confusion and of unsettled conditions in China. Notwithstanding that fact, it would seem sound to have American activities in China after the hostilities establish and maintain themselves under conditions indigenous to the country and under conditions which will have a greater degree of permanence than any conditions brought about—at best for a temporary period—by any effort to retain extraterritorial or other special rights. Should extraterritorial jurisdiction be retained in China for a period of unsettled conditions likely to follow immediately upon termination of hostilities,9 American nationals would be encouraged to return to China and to resume to some extent the activities which have been practicable under an extraterritorial system. Later, when China would press for abolition of extraterritorial rights, such Americans would protest and, when they had to yield to an inevitable development, would have to make one more fundamental readjustment in their activities. It would seem desirable not to envisage the re-emergence of a system which in a broad sense no longer conforms to modern concepts.

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The considerations contra the Government of the United States taking an initiative at this time toward entering into negotiations with the Chinese Government for the conclusion of a new, standard treaty in which the United States would, inter alia, relinquish extraterritorial and other special related rights which its nationals possess in China are easier to list than the considerations pro and at first glance may seem to outweigh the considerations pro. However, in the opinion of the author of this memorandum, the considerations pro are of a more substantial and enduring character than those contra. While this immediate moment may not be an opportune time for this Government to take an initiative along the lines under discussion and while such an opportune moment may not arise at least until we can see the outcome of the present consideration being given by the British Government to the question of the status of India, it is recommended that the Division of Commercial Treaties and Agreements and the Division of Far Eastern Affairs set up a small committee to begin in strict confidence preparatory work looking toward the drafting of a suitable treaty which might be presented by this Government to the Chinese Government in the not too distant future.

Note: It is believed that this Government would wish at an appropriate stage to confer with the British Government.

M[axwell] M. H[amilton]
  1. Foreign Relations, Japan, 1931–1941, vol. i, p. 929.
  2. Treaty of Friendship, Commerce and Navigation, signed at Bangkok, November 13, 1937, Department of State Treaty Series No. 940, or 53 Stat. 1731.
  3. Supra.
  4. Marginal notation by Mr. Hornbeck: “There will be a ‘peace conference’ of some sort—at which such matters will have to be considered. SKH.”