The Secretary of State to the Ambassador in China ( Stuart )
154. Interpretation of Emb re intent of treaty approved by Dept, which gravely concerned that Chinese Govt view, described Embtel 191, Feb 3, would jeopardize American real property rights outside treaty ports except re missionary owned property, Dept agrees Emb that treaty provision refers to fraudulent or dishonest practices between parties to transaction. This view borne out by enclosure to secret instruction no. 7, Aug 2, 1946,7 which shows page 2 and following pages that U. S. rejected broad term “illegal practices” and obtained Chinese consent to narrower term “fraud or fraudulent or other [Page 1388] dishonest practices”. Furthermore Mr. Liu’s8 reference (page 3 enclosure) to “misrepresentation” certainly refers only to relations between parties to transaction. Also reference in treaty provision to establishment proof “through due process of law” clear indication that provision was intended [to] refer to relations between parties to transaction. Emb should take firm and unequivocal stand that treaty affords full protection real property rights in question and should inform Dept all developments.