The Counselor of Embassy in China ( Smyth ) to the Secretary of State

425. Settlements and Diplomatic Quarter. FonOff reply dated Feb 8 to British note (Embtel 127, Jan 18, repeated Shanghai as 39) rejected all British proposals and pointed out in substance that (1) there is no need for supplementary agreements covering transfer of settlements; (2) regulations promulgated by Executive Yuan provide basis for carrying out treaty and at no point conflicts with Sino-British treaty; (3) regulations permit foreigners to attend meetings of commissions, and British nationals have opportunity of expressing their views; and (4) if results of liquidation unsatisfactory, matter may be discussed with Chinese Govt. (Sent Dept 425, repeated Shanghai 159, March 4, 3 p.m.)

FonOff reply dated Feb 22 to our Govt [note] (Embtel 240, Feb 7,20 repeated Shanghai as 79) has been transmitted in our 411, March 2 (repeated Shanghai as 151).

Embassy considers FonOff reply to our note unsatisfactory. Commissions appointed under Chinese regulations do not appear to be taking any active steps toward liquidation of International Settlement. Embassy feels that we should take up matter again with FonOff, and urge that Chinese Govt consult or discuss with US and other govts concerned, particularly with a view to reaching as soon as possible a mutually satisfactory and just settlement of official obligations and liabilities of Diplomatic Quarter and Settlements. We understand that British Embassy has recommended to London that matter be taken up again with Chinese.

For Dept’s information, British are now compiling claims arising out of rendition of International Settlement at Shanghai. Pending a settlement, British Govt is advancing to former British employees of International Settlement monies against pensions and superannuation. Limit of forty pounds per month has been advanced to pensioners as from Oct 1, 1941. Limit of 40 pounds per month is being advanced on superannuation funds as from Sept 2, 1945, provided employee does not receive pension and agrees to assign fund to British Govt. If Dept has no objection, we will request our Consulate in Shanghai to obtain statements regarding American claims.

  1. See footnote 14, p. 1354.