Papers relating to the foreign relations of the United States, 1928, Volume II

893.512/848: Telegram

The Secretary of State to the Chargé in China (Perkins)

[Paraphrase]

Washington, September 20, 1928—8 p.m.

323. Your telegram No. 672, August 31, 7 p.m.⁶⁶ There is nothing in your No. 672, or in any other direct statement by anyone connected with the matter, to make it appear that either Bristol or any other naval officer actually participated in any way in making the agreement between the Standard Oil Company and Generals Yang Sen and Liu Hsiang. The naval officers, it appears, by arranging for transportation of the interested parties to the place of meeting, merely facilitated the reaching of an agreement which would enable the American company to continue operations.

2. Under the situation now existing in China, trade agreements of this sort, as you point out, are not novel.

3. Those private arrangements which are entered into between de facto military authorities in disturbed areas and private American citizens who are doing business in such areas are guided always by practical considerations existing at the place and time; an element of force majeure exercised against the citizen is always involved in the making of such arrangements; usually, therefore, such arrangements are not regarded as binding upon our Government nor as compromising the position of our Government on questions affecting the relationship between it and the other government.

4. The Department does not wish to be placed in the position of appearing to act upon the principle that arrangements between local military leaders in China in de facto control of an area and private American citizens doing business or located in such area can alter or even affect in any way obligations under treaties between the United States and China, nor can the Department undertake to so act as to lend color to a suggestion that naval officers, even if, as does not appear, they had acted directly in this case, have any authority to act for our Government in its formal relations with China. Engagements of a binding and operative nature between governments cannot be made in this way. It appears likely that China would not recognize in the military leaders concerned any authority to enter into arrangements binding upon China, particularly if obligations were imposed; and it would seem that if no authority exists to impose obligations, none exists to stipulate for favors.

5. The Chinese Government might, on the other hand, consider applicable a different principle if, instead of participation by our naval officers, the Legation or a responsible member of the Legation staff should, by negotiating with a responsible officer of the Chinese Government, take part in effecting such an arrangement as is under consideration.

6. The entire transaction is regarded thus by the Department: Naval officers who were present at the time and place, charged with protecting American life, property, and interests, decided that instead of using the naval forces to protect American trade by force, it was easier and wiser to allow American citizens themselves to enter into arrangements with the de facto military leaders in control of the area, the naval authorities giving such informal assistance to this end as they could.

For this Government to accord undue emphasis to the impropriety of agreements of this nature, under the circumstances existing at the time and place this was made, would, in the opinion of the Department, not only give cause for a false impression in the minds of the Chinese as to the significance of such agreements, but also, in the present situation, would embarrass and militate against the promotion and protection of American trade and commerce in China.

7. Legation’s 716, September 19, 5 p.m. You may inform Bristol that a telegram has been received by you from the Department commenting in regard to the private tax arrangement made by the Standard Oil Company with Generals Yang Sen and Liu Hsiang, and that in the course of such telegram the Department expressed its entire concurrence with his views in regard to the use of naval forces in preventing taxation as set forth in the Legation’s 672, August 31, 7 p.m., and invited attention to the identity of these views with the Department’s statement in its telegram 302, July 30, 1927, 7 p.m.,⁷⁰ that “this Government was not ready to undertake an obligation to use military or naval forces to protect the companies against such taxes” and statements of a similar nature in other instructions. His attention may be invited also to this Government’s desire to avoid being associated with private agreements of this character, even going so far as to refrain from protests against violations of such agreements (see Department’s 278, July 7, 1927, 2 p.m.).⁷¹ It is felt that the naval authorities are entitled to have full information concerning this Government’s attitude in these matters, since all United States Government agencies in China are pursuing the one object, namely, the utmost assistance, consistent with the general interests, to each American citizen or firm. Singleness of policy is clearly desirable in pursuing this aim.

Kellogg

66. Not printed.
70. Foreign Relations, 1927, vol. ii, p. 444.
71. ibid., p. 393.