The Consul General at Shanghai (Davis) to the Ambassador in China (Stuart)2

No. 296

Subject: Liquidation Commission of the Former International Settlement at Shanghai: Country Hospital, Shanghai General Hospital and Victoria Nurses Home.

Sir: I have the honor to enclose a copy of a letter dated July 23, 1947, from Dr. George Sellett, American Adviser to the Liquidation Commission for the International Settlement at Shanghai, outlining an agreement informally proposed by the Chinese for the disposal of the three above-mentioned institutions.

It will be noted that under the proposed plan Chinese authorities will relinquish all claims to the Country Hospital; that the Shanghai General Hospital is to be operated in the future under a revised trust deed whereby the foreign community will be represented on the Board of Governors; and, that one or two floors of the Victoria Nurses Home will be set aside for the residence of nurses of the Country Hospital. Since the letter was written the matter has been further explored and the Foreign Advisers and this Consulate General are convinced that the settlement as outlined is the best that could be made under present conditions at Shanghai. However, before agreeing to this settlement the Consulate General would welcome any comments that the Embassy and Department might care to make on the subject.

Respectfully yours,

Monnett B. Davis
[Page 1408]

The American Adviser to the Liquidation Commission for the International Settlement at Shanghai (Sellett) to the Consul General at Shanghai (Davis)

Dear Mr. Davis:

Liquidation Commission: Country Hospital, Shanghai General Hospital and Victoria Nurses Home.

The Second Sub-committee of the Commission for the Liquidation of Official Assets, Obligations and Liabilities of the former International Settlement at Shanghai deals with all problems of the Commission excepting the claims of ex-employees of the former Shanghai Municipal Council. The Second Sub-committee has considered at great length the status of the Country Hospital, the Shanghai General Hospital and the Victoria Nurses Home, but agreement on these properties has not been reached. A majority of the members of this Sub-committee are Chinese. Mr. Jeffery of the British Consulate and I are the foreign members.

Dr. Y. J. Cieh of the Bureau of Public Health has been serving on the Second Sub-committee as proxy for Dr. Chang Wei, Commissioner of Public Health. Yesterday Dr. Cieh came to my office and told me that he was authorized to make the following proposals:

Country Hospital—The Chinese Government will relinquish all claims to the Country Hospital and the foreign community of Shanghai can have complete control thereof.

Shanghai General Hospital—The trust deed shall be revised to provide that the nine members of the Board of Governors shall be designated as follows: six (possibly five) by the Shanghai Municipal Government and City Council and three (possibly four) by the foreign community of Shanghai. The trustees of the property shall be designated by the Board of Governors.

Victoria Nurses Home—One floor (possibly two floors) shall be used for the accommodation of nurses of the Country Hospital. The remainder of the building shall be at the disposal of the Chinese Government.

Dr. Cieh did not mention the source of his authority, but stated that the foregoing proposals would be carried out by the Chinese Government if acceptable to the foreign advisers of the Liquidation Commission. In that event he desired me to draft the necessary resolutions, in such form as I would consider appropriate, and deliver them to him. The resolutions would then be dealt with as originating with the Chinese members of the Sub-committee and he would present and move the adoption of the resolutions. I did not express my views regarding Dr. Cieh’s proposals but told him that they would receive [Page 1409] consideration and I would discuss the matter with him within a few days.

Throughout the discussions in the Second Sub-committee Mr. Jeffrey and I took the position that the Country Hospital and the General Hospital are charitable trusts and are not official assets of the former International Settlement. With respect to the Victoria Nurses Home, we expressed the opinion that while being an official asset of the former International Settlement, it was dedicated as a home for foreign and Chinese nurses and there was an obligation on the part of the Chinese Government to use it for that purpose. From time to time we indicated a willingness to compromise, but no reasonable basis for compromise appeared attainable.

The Country Hospital was established by a deed of gift dated March 31, 1926. The donor, Mr. Charles Ernest Rayner, is an American citizen now residing at Santa Barbara, California. The General Hospital was established by a trust deed dated July 30, 1878. Prior to that date the General Hospital had been operated as a business enterprise owned by shareholders. In the altered circumstances brought about by the Treaties abolishing extraterritoriality3 the deeds do not now provide a workable basis for control and operation of these hospitals. This results principally from the methods provided for in the deeds for the selection of the boards of governors for these hospitals. In the case of the Country Hospital it is quite clear from the deed of gift that the donor intended that the hospital should be used for the benefit of the foreign residents in and around Shanghai and that the hospital should be controlled and managed by foreigners. Similar intentions are disclosed by the trust deed of the General Hospital. Both are charitable trusts and it would not be difficult to revise the deeds so as to make it possible to carry out the wishes and intentions of the original donors. Neither of these hospitals was ever included in the balance sheet of the former Shanghai Municipal Council as an asset of the Council.

Sir Allan Mossop, former Judge of H. B. M. Supreme Court for China, has given consideration to the legal problem arising out of the deed of gift of the Country Hospital and the trust deed of the General Hospital in the changed political situation resulting from the relinquishment Treaties. I believe it is his view that the Shanghai Municipal Government, as the successor to the Shanghai Municipal Council, stands in the position of the former S. M. C. with respect to these hospitals, e. g. where the S. M. C. had the right to designate a certain [Page 1410] number of governors, that right has now passed to the Shanghai Municipal Government. It is my opinion that neither the Shanghai Municipal Government nor any other Chinese government or Chinese non-governmental organization succeeded to this right. These deeds disclose a very clear intention on the part of the donors that these hospitals shall be for the use of this foreign community and shall be controlled and managed by foreigners. If the view is taken that in the changed political situation the right to designate governors passed to the Chinese Government or to other Chinese organizations the clearly expressed intentions and purposes of the donors would be defeated because these hospitals for the use of foreigners would then be controlled and managed by Chinese. These are charitable trusts and under American and British law as well as under Chinese law the original legitimate intentions of the donors should be carried out and the necessary revisions in the deeds should be made to accomplish that end.

The Victoria Nurses Home at 23 Chung Cheng Road, Western (formerly Great Western Road) presents a more difficult problem. The claims of the foreign community to this institution are not very strong. In 1897 a committee of British residents of Shanghai raised the sum of Taels 420,000.00 by public subscription for the purpose of providing a memorial of Queen Victoria’s Diamond Jubilee. Subscriptions were mainly British, but included other foreign nationals. These funds were used to erect a building on land owned by the S. M. C. near Range Road. Upon completion the building was formally delivered to the S. M. C. and named the Victoria Nursing Institute (later Victoria Nursing Home). Thereafter additions were made to the Victoria Nursing Home by the S. M. C. In 1928, as a measure of economy, the Victoria Nursing Home was closed. A few years later the present Victoria Nurses Home was built on land adjacent to the Country Hospital. At the formal opening of the Victoria Nurses Home in 1933 the Chairman of the S. M. C. declared: “The Council in 1927, upon the recommendation of the Municipal Economy Committee, decided to close the Victoria Nursing Home, Range Road, on January 1st, 1928. As the Victoria Nursing Home was built in 1901 by public subscription on municipal land in commemoration of Queen Victoria’s Diamond Jubilee, the Council decided to perpetuate the memorial in the form of a home for nurses.” The cost of the new Victoria Nurses Home was undoubtedly many times the sum provided by the Diamond Jubilee Committee.

Following V–J Day the British Red Cross occupied the Country Hospital and some months later turned it over to the control of members of the Hospital’s last Board of Governors. Consequently, the [Page 1411] Country Hospital is now under the control of foreigners acting for the foreign community of Shanghai. Immediately after V–J Day the General Hospital was taken over by the Shanghai Municipal Government from the Japanese. Early in 1946 a Provisional Board of Governors was set up for the General Hospital. The Chinese invited several foreigners to join the Provisional Board, but a majority of the members are Chinese. The Shanghai Municipal Government took possession of the Victoria Nurses Home shortly after V–J Day. At the present time it is being used as a dental clinic, a hospital for special maternity cases and a tuberculosis hospital.

In the Second Sub-committee discussions the Chinese members took the position that the two hospitals and the Victoria Nurses Home are official assets of the former International Settlement to be transferred to the Chinese Government. They indicated a willingness to have a board of governors for each of the two hospitals, a minority of the governors to be designated by the foreign community of Shanghai. As to the Victoria Nurses Home, the Chinese members appeared willing to allocate two floors, or possibly three, for the use of Chinese and foreign nurses without a binding undertaking that any specific portion of the allocated space would be available for the accommodation of nurses of the Country Hospital.

In my opinion the proposals made by Dr. Cieh yesterday present a basis for compromise which should be considered acceptable by the foreign community of Shanghai. It would give to the foreign community complete control and management of the Country Hospital as intended by Mr. Rayner, the donor. It is probable that the foreign community of Shanghai will be able financially to support the Country Hospital. The General Hospital is already under the control of the Shanghai Municipal Government. Sir Robert Calder Marshall, Mr. John Keswick and I are the foreign members of its Provisional Board of Governors. After more than a year’s experience with the problems of the General Hospital I believe that a minority of foreigners on its Board of Governors will have no marked influence on the policies of operation and management. Some provision could probably be made to reasonably insure that a substantial portion of the facilities of the hospital will be available for the accommodation of foreigners. For some decades past the General Hospital was dealt with in considerable measure as if it were a municipal hospital. The S. M. C. provided the funds, or guaranteed the repayment of borrowed moneys, necessary for the large expansion of the hospital and to meet current operating deficits. While the hospital never legally became a property of the S. M. C. its financial history furnishes a basis for a fairly strong claim by the Chinese Government. As to the Victoria [Page 1412] Nurses Home, the facts do not appear to support a very strong claim by the foreign community of Shanghai. I doubt whether Dr. Cieh’s proposal regarding the Victoria Nurses Home would prove to be permanently satisfactory. Eventually it would probably become necessary to build a home for nurses of the Country Hospital on the present hospital grounds or elsewhere.

Last February I attended as informal meeting in the office of Mr. John Keswick. Judge Helmick4 and representative members of the British community were present. In that meeting I presented the view that legally and equitably the foreign community of Shanghai is entitled to complete control of the Country Hospital and at least minority representation on the Board of Governors of the General Hospital. As to the Victoria Nurses Home, I expressed the thought that an acceptable basis for compromise would be the use of two floors for the accommodation of nurses of the Country Hospital for a period of five or ten years. During such period the Country Hospital might find the funds with which to erect a building for the accommodation of its nurses. Nurses of the Country Hospital are now utilizing a substantial portion of the space in the hospital otherwise available for patients. Judge Helmick fully supported my views regarding the three institutions. The British representatives present, including Mr. Jeffery, believed that a settlement on the basis of these views would be highly desirable but they feared that efforts to reach such settlement would not have strong support from the British Embassy which would probably be influenced by the opinions expressed by Judge Mossop. However, in subsequent meetings of the Second Sub-committee Mr. Jeffery very strongly supported my position on these three institutions.

It is suggested that the views of the American Embassy be obtained regarding the Chinese proposals made informally by Dr. Cieh. The State Department’s views might be obtained by cable. I have informed Mr. Jeffery of these proposals and understand he will transmit the information to the British Embassy.

Sincerely yours,

George Sellett
  1. Copy transmitted to the Department by the Consul General without covering despatch; received September 16.
  2. The Sino-American Treaty Relinquishing Extraterritorial Rights was signed at Washington, January 11, 1943; Department of State Treaty Series No. 984, or 57 Stat. (pt. 2) 767. The Sino-British Treaty was signed at Chungking, January 11, 1943; League of Nations Treaty Series, vol. ccv, p. 69.
  3. Milton J. Helmick, judge on the United States Court for China, 1934–43.