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

No. 756

Sir: I have the honor to refer to the despatch 647 of April 18, 194716 regarding the registration of American rights to real property and the replacement of documents pertaining thereto and to review for the Department’s information developments which have taken place subsequent to that date.

The Embassy on February 17 addressed a note (copy transmitted to the Department as enclosure No. 11 to despatch 545, March 7, 194717) to the Ministry of Foreign Affairs conveying formally the views of the United States Government regarding the interpretation of Article IV of the 1943 Sino-American Treaty as it relates to property rights acquired outside of the treaty ports by American citizens under the system of beneficial ownership. This note remains unanswered. However, the Embassy has taken occasion repeatedly to bring this issue, the settlement of which it regards as fundamental to the implementation of the article of the treaty under reference, to the attention of the Ministry of Foreign Affairs.

[Page 1393]

An excellent opportunity for emphasizing the importance which is attached to the settlement of this problem was afforded by the recent visit of Dr. Ruth Bacon who participated in two conferences with the Foreign Minister18 regarding it. In addition Dr. Bacon was present at a dinner party at the Ambassador’s home to which were likewise invited Foreign Office officials dealing with this problem and the Vice-Minister of the newly formed Ministry of Land Administration. At this time she was able to discuss informally the problems which have arisen in connection with land registration.

The Embassy wishes to commend Dr. Bacon upon the skillful and tactful manner in which she participated in these discussions and is confident that the significance and the timing of her arrival in China were not lost upon the Foreign Minister and other Chinese officials.

The Minister-Counselor19 availed himself of the opportunity of Dr. Bacon’s visit to address a personal letter to the Foreign Minister enclosing for his attention a copy of the Embassy’s note referred to above as well as a copy of a personal letter (transmitted to the Department as enclosure 8 to despatch 545, March 7) which he addressed on February 6 to Dr. Liu Chieh, the then Vice-Minister for Foreign Affairs. A copy of the letter addressed to the Foreign Minister on April 28 is enclosed.20

The Embassy is encouraged to believe that its persistent efforts to obtain recognition of the rights of American beneficial owners of property located outside of the treaty ports have begun to bear fruit. For the first time since this question has been under discussion, officials of the Ministry of Foreign Affairs, during a conference on May 5, expressed oral agreement with the Embassy’s view that beneficial owners outside the treaty ports receive the same treatment as those within treaty areas and that regulations established for the registration of land in Shanghai be extended throughout the country. Likewise significant was the statement of Hu Ching-yui, Director of the Treaty Department, that it was not the intention of the Chinese Government to question the legality of American beneficial ownership outside the treaty ports. This is a complete reversal of the stand taken previously by officials of the Ministry in discussions. A copy of an aide-mémoire handed the Foreign Minister upon the conclusion of this conference is also enclosed.

While the Embassy finds this change of attitude encouraging it would point out that it has often proven a long and arduous process after obtaining oral concurrence to have regulations issued which reflect the agreement. Furthermore, the Foreign Minister may have [Page 1394] been influenced to assume, for the moment at least, a more moderate attitude by his awareness that Dr. Bacon was returning directly to the Department bearing her impressions of the Chinese attitude toward this question and by overriding political considerations relating to Sino-American relations. That further obstacles may arise is suggested by a subsequent statement by Mr. Hu to an officer of the Embassy that he “hoped” it might be possible to win the Land Administration to acceptance of the present Foreign Office view.

As may be noted from the enclosed memorandum, the Director of the Treaty Department, during the conference of May 5, emphasized that the replacement of land documents under the 1943 treaty is optional with the Chinese Government and that the Chinese Government is obligated to replace such documents without fees only in the event that it makes the replacement of documents compulsory. That is, if an American who owns property in an area in which compulsory replacement of documents has not been instituted by Chinese authorities wishes to register his property and obtain a new deed of ownership in his own name, he would be required to pay fees therefor, in accordance with Chinese law. He added that the replacement of existing documents had not been required outside of treaty ports and that it was not the intention of the Chinese Government to require it at this time. The immediately preceeding remark may be significant as indicating the formula, referred to in previous despatches, by which the Foreign Office hopes to avoid a showdown at this time regarding foreign-owned real property rights outside the treaty ports. The Embassy is of the opinion that a postponement of this question, such as is implied in the foregoing, would not be in American interests since political factors now obtaining make the present a propitious time to press for general acceptance of the American view. However, it would welcome the Department’s comments and instructions in order that it might be prepared to take appropriate steps should the course tentatively suggested above be given more definite form by the Chinese Government.

Incidentally, some significance may be attached to the emphasis placed by the Foreign Office on the collection of fees. Officers of the British Embassy concerned with the same problem have obtained the impression that opposition of the Land Administration to acceptance of the view that the 1943 Treaty21 affords protection to foreign beneficial owners of property outside treaty ports arises more from its reluctance to forego the substantial fees involved than from a desire to confiscate the property.

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Another difficulty, of immediate importance, which has arisen is the establishment of deadlines for registration of property which do not allow adequate time for publicizing the requirements and filing claims. This problem has been the subject of previous communications between the Embassy and the Foreign Office. In the Minister-Counselor’s letter to the Foreign Minister dated April 28, the matter was again brought to his attention with particular reference to establishment of April 30 as the deadline for property registration in Shanghai. The reply of the Ministry of Foreign Affairs, a copy of which is enclosed, was summarized in the Embassy’s telegram 952 (to Shanghai as 406) of May 3.

The Embassy is aware that under existing conditions notices regarding the establishment of time limits for the registration of property might, in the case of isolated areas, be long delayed in reaching the Consular office concerned. It therefore proposes to ask the Ministry of Foreign Affairs to make arrangements with the Nanking Land Administration whereby the Embassy will be promptly informed of deadlines for the registration of property whenever such may be established. Information received through this channel will in turn be relayed to the Department and the Consular office concerned.

Respectfully yours,

For the Ambassador:
W. W. Butterworth

Minister-Counselor of Embassy
  1. Not printed.
  2. Despatch and enclosures not printed.
  3. Wang Shih-chieh.
  4. W. Walton Butterworth.
  5. Enclosures not printed.
  6. Treaty between the United Kingdom and China whereby the former relinquished extraterritorial rights, signed at Chungking, January 11, 1943; League of Nations Treaty Series, vol. ccv, p. 69.