711.933/374: Telegram

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

1017. Your 770, August 27, 2 p.m.29 Sober consideration on the ground in China of the situation and trends in this country does not in my opinion support proposal that we now surrender our extraterritorial and related rights by a brief treaty such as outlined in telegram under reference with provisions in only a few of the many questions which will arise upon and in connection with relinquishment of such special rights.

I believe that the time is approaching when we should take initiative by proposing treaty discussions but I strongly recommend that we seek conclusion of comprehensive treaties to regulate future Sino-American relations.

I have no doubt that China would be glad to accept proposal for a brief treaty such as has been suggested with postponement to a later date probably indefinitely of consideration non-comprehensive [sic] treaties. China at present is in a mood to receive; almost to demand; and not to give or concede. There is a definite trend toward nationalization and government monopolies. There is a disposition to consider the taking over or suppression of established foreign interests in China, the natural concomitant of relinquishment of extraterritorial and related rights. There is openly expressed expectation that after war America will finance Chinese reconstruction and rehabilitation and execution of grandiose schemes for industrial and other expansion by Government not private loans and credits for Chinese benefit and profit; loans secured only on China’s national credit with little concern apparently as to their repayments.

There is no evidence of disposition to respect the principle of mutual benefit in trade or other relations. This is not a healthy or [Page 289] satisfactory situation for future Sino-American relations, and an over-generous policy at this time of first surrendering extraterritorial and related rights and expecting later fair and just treatment in general and trade relations would in my opinion be fatal.

The Chinese should be brought to realize that in surrendering our special rights we consider that China assumes obligations and responsibilities toward American interests which must be recognized and met and that China is under the obligation to do its share in placing Sino-American relations on a satisfactory basis of mutual respect, consideration, benefit and profit. I know of no more satisfactory means of bringing this about than to insist that comprehensive treaties be negotiated to come into force with the surrender of our special rights.

Unless such treaties exist upon the termination of hostilities there will be long delay and great uncertainty before satisfactory trade and other relations can be established. After the war China will undoubtedly face difficult domestic problems. The opportunity for the successful negotiation of comprehensive treaties likely will not be found during that period but if such treaties can be settled now we may be able to participate promptly and effectively in Chinese rehabilitation and reconstruction with some reasonable assurance as to the settled basis of our relationship and with mutual benefit. The existence of basic foreign treaties might also be a stabilizing influence in the reestablishment and organization of the Chinese Government after the war.

The negotiations of such treaties would, of course, require delay; but that delay would also be found after the termination of hostilities. Possible attempts of our enemies to exploit any delay for purposes of propaganda would be readily answerable in the abundant evidence of conditions in the occupied areas and the existing relations between our enemies and their puppet regimes in those areas.

I am concerned that in the outline of proposed brief treaty there is no suggestion that such treaty would be accompanied by a protocol or other understanding providing reasonable minimum safeguards for our nationals and their interests when they come under Chinese jurisdiction. I do not suggest that we can expect to obtain all safeguards contemplated in the understanding which was about to be initialed in 1931,30 but I do believe that we can properly expect a declaration of a minimum of essential safeguards to protect our nationals and their interests. The unsatisfactory Chinese police, judicial and prison systems have not improved during the past decade; they have, in fact, suffered in retrograde; and unfortunately, a system [Page 290] of both Government and party secret services has spread throughout the country and gained extensive power and domination which seriously threatens the enjoyment of “four freedoms”31 not only by Chinese people but by foreigners in this country.

In studying the outline or [of?] proposed brief treaty, the Embassy at Chungking has no files or treaty texts permitting of detailed examination, but the following comments are believed to be pertinent:

As to paragraphs (a) and (b) it seems to be that we have a moral if not a legal obligation in agreeing to the surrender of international settlements to Chinese administration to insure that there will be just and equitable arrangements in regard to the obligations of the former international administrations; and not the obligations to Americans alone. At Shanghai particularly there are substantial municipal assets to be taken into consideration.

This may not be a matter for inclusion in the treaty, but an arrangement should be reached before we agree to surrender of the areas.

In connection with our right under the Boxer Protocol it has been my impression that title to our Embassy property at Peiping is derived through that protocol. That title should be protected. The Generalissimo has told diplomatic representatives that he contemplates that ultimately the capital of China will be moved back to Peiping; at that time our Embassy establishment there will be important to us.

As to paragraph (c), new deeds replacing leases in perpetuity should be of equal tenure and it would be well to provide that there shall be no restrictions on sale or transfer of properties whether in the ports or in the interior. There has been some indication in recent years that Chinese local authorities claim that mission property cannot be sold but may be reclaimed by the local authorities at the original purchase price when no longer desired for mission purposes.

In paragraph (d), the reference to “areas closed for reasons of national security” might be availed of unduly to restrict foreign residence and trade arbitrarily. Careful study of the wording of such a paragraph is suggested.

There have recently arrived in the United States from China a number of foreign service officers of long practical experience in the field in China, familiar with the details and background of China problems. I suggest that these officers could contribute substantially in the detailed study of our treaty relations with China before being reassigned to the field.

  1. See footnote 26, p. 282.
  2. See draft of a treaty between China and the United States, revised as of July 14, 1931, Foreign Relations, 1931, vol. iii, p. 893.
  3. See President Roosevelt’s address to Congress on January 6, 1941, Department of State, Peace and War: United States Foreign Policy, 1981–1941 (Washington, Government Printing Office, 1943), p. 608.