Foreign rights and interests in China

Front matter

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CHARLES WILLIAM WASON

Preface

The purpose of this volume is to provide a statement of the rights of foreigners and the interests of foreign States in China as they are to be found stated in treaties with or relating to China or in oliier documents of an official or quasi-official character. Viewed from the other side, the account will e^iibit the limitations under which the Chinese Government is compelled to act not only with regard to matters of international obligation but as to matters which, in countries more fortunately circumstanced, are of purely domestic concern.

Whether the purpose of the volume has been satisfactorily achieved, the reader will determine, but that there is a pressing need for a work that wiU furnish an explanation and definite statement of the rights and interests which the Treaty Powers and their nationals have obtained in China, few will question. Anyone who has been in China, or has had business interests with that country, or has sought to gain an understanding of the conflict of national interests in the Far East, will testify to the urgency of this need. This is not to say, however, that there are not already books which deal with many of these topics. There are such treatises, and among them, especially deserving mention, are: H. B. Morse's The Trade and Administration of China, 3d ed., published in 1913, and his three volumes on Foreign Relations of the Chinese Empire, 183^-1911; V. K. Wellington Koo's The Status of Aliens in China, published in 1912; T. E. Jemigan's China in Law and Commerce, published in 1905 ; T. W. Overlach's Foreign Financial Control in Chirm, published in 1919 ; and M. T. Z. Tyau's The Legal Obligations Arising out of Treaty Relations between China and Other States, published in 1917. Prom these volumes the author has derived the greatest aid. It will appear, however, that he has explained many matters wlhich are not discussed by these earlier writers, and, of course, there has been opportunity to deal with the important developments of the last few years.

iii iv PREFACE

SuflScient has been said to indicate that this volume makes no claim to describe present political conditions in China, nor, upon the side of international laMr and dipisomacy, to estimate the ethical character or practical wisdom of the policies which the several Treaty Powers have pursued in their dealings with China. But the volume wiU bav& failed to achieve onei of its, puarpoee& if it does not suppl; information Uom which tb« reades can obt^iQi sa und^etandiog oi what these policies have hse» in the, p^st, and be aided to form an intelligent iujdig;ment as to whsd, they should be in the future^ As regards, however,, thisi last matten, weight, must be given to matters which are not diseoseed in the> presenit volume. These mattera relate to existing domestic eonditions im China, and^ especially, to Oxe- question whether it is lik^y that China wiU be able, without foreign aid, to re-establish order ia km hoiwehoM and to, place her admijDigtraitive services upon an ^Seieat worising haais.. Also must be considered the manner in whidi th» sevet al Powers have, in practio^ exercised their rightg of claims tio special interests in China, and weight, mniist be gjnv^n ta the dominant pditioal princjixles and smabitiona ol thei Powers eomcernied. Farticularl^ is. it necessary that Japan's relation to China shoxild be viewed in tiie Mght of 'Uiese facts. Th« author hope& that he may later fiad time ta prepare another volume in whieh these; questions pan be discussed. He. has thought it advisable, howevex, not te extend, the scope of the present volume beyond what has beex) indicated.

A further word should be said as to the mode adopted for presenting the facts dealt with. The. policy has been pursued of qaoting, KberalLy froiai the treaties and other official; papers. This has required somewhat more space than a summary in the author's own language would have demanded, but, it i» believed, the result will be satisfactory to the reader who will thus^ be made certain as to the actual language of the decuments in question and be enabled to judge for himself whether the conclusions stated in the body of the text have been paroperly drawn. In result,, the student will biave^ as it were, a handbook to the. international eommiitments of China, and» in most cases, be saved the necessity of resorting, to the volumes in whieh these agreements are set out in fulL Of these collections of China treaties there are several, the titles and

PEEFACE T

scope of -which are listed in the note which follows. It will be found that by far the greatest use has been made of Mr. Mac- Murray's collection, and, in fact, much of whatever merit the present volume may possess is due to the fact that Mr. MacMurray has kindly made accessible to the author the galley proofs of his valuable compilation. All persons interested in the matter of treaties with or relating to China will owe a great debt of gratitude to Mr. MacMurray for the painstaking care with which he has made his collection.

Hon. Paul S. Eeinsch, former American Minister to China, and Dr. Stanley K. Hornbeck have kindly spared the time to read the proofs of the present volume, and have made suggestions and corrections which have been of the greatest value to the author.

w. w. w.

CO'LLBCTIOKS OF TREATIES WITH OR RELATING

TO CHINA

Sir E. Hertslbt. Treaties between Great Britain and China and Foreign Powers. 3rd Edition, 2 volumes, revised, London, 1908. (Cited as " Hertslet/')

Volume I contains the texts of treaties, 1689-1907. Only treaties in force on January 1, 1908 are included, and where clauses of different treaties are precisely the same or their wording practically identical, they have been given but once. The treaties whose texts are given are gathered into three groups: (1) Treaties between Great Britain and China, 1842-1907; (2) Treaties between China and Foreign Powers other than Great Britain, 1689-1907; and (3) Treaties between Foreign Powers and between Great Britain and Foreign Powers, respecting China, 1896-1907.

Volume II contains acts of the British Parliament, Orders in Council, and Eules and Eegulations affecting British Interests in China, 1855-1907, and Miscellaneous Documents, 1877-1907. There is a general index.

W. F. Mayers. Treaties between the Empire of China and Foreign Powers. Shanghai, 1877.

This collection, iirst published in 1877 and for a time out of print, was revised and reissued in 1897. The texts have not been reproduced vdth conspicuous accuracy, and the collection is not now of considerable value.

W. W. EocKHiLL. Treaties and Conventions with or concerning China and Korea, 1894-1904-. Washington (U. S. Government Printing Office) 1904. Cited " RoclchiU."

This compilation was prepared as a continuation of Hertslet. In addition to the formal treaties, the texts are given of less formal Declarations and Arrangements, of Mining and Railway Concessions, and of some other miscellaneous documents.

vi

PEEFACE vii

W. W. RocKHiLL. Treaties. Conventions, Agreements, Ordinances, Etc. Relating to China and Korea. October, 1904-January, 1908. Washington (U. S. Government Printing Office, 1908.) Cited as " Eockhill, Suppl."

This is a Supplement to the preceding, covering four more years.

The Maritime Customs. Treaties, Conventions, Etc. between China and Foreign States. Two volumes, 2d Edition, Shanghai, 1917. Cited " Customs Treaties."

This excellent collection, published by the Inspector General of the Chinese Maritime Customs, contains not simply the full texts of treaties in force, but all those entered into by China from the first one of which there is a record, in 1689, to the date of publication. The treaties are published in their original texts, but usually with English or French translations, in cases in which the originals are in neither of those languages.

J. V. A. MacMueray. Treaties and Agreements with or concerning China, 1894-1919. Two volumes. The Carnegie Endowment for International Peace. Washington, D. C, 1919. Cited " MacMurray."

The references are to the serial numbers of the documents, it being impossible to give the page numbers, as the collection was only in "gaUey" proof at the time the present volume went to press.

These recently issued volumes now provide, for the period covered, the most valuable of all the treaty compilations relating to China, and, wherever possible, wiU be cited in preference to the other collections. The volumes are compiled upon substantially the same principles of selection as those of Rockhill's two volumes ; the documents, however, are not grouped as in Eockhill but are arranged in strictly chronological order. Valuable notes indicate the relations between the several agreements, and an excellent index is provided. In all cases the English text or translation is given.

Mr. MacMurray in his Introductory Note says : " The underlying principle of Mr. Eockhill's collection was his appreciation of the fact that, with the Japanese War, China entered upon a new viii PHEFACB

course of national development, the history of which is to be read not only — ^nor even primarily — in the Treaties and other formal international engagements, but rather in the arrangements of nominally private character, with syndicates or firms of foreign nationality, under which the Chinese Government then began to incur a complex and far-reaching set of obligations and commitments, in which the financial or economic element is often merged indistinguishably with political considerations." Hence, as has been already noted, in Mr. Rockhill's volumes are to be found the texts of many mining and railway concession agreements. This character of material becomes even more prominent in Mr. Mac- Murray's collection.

Contents

FASE

Preface i

Collection of Treaties with or Eelating to China vi

Introduction

From the standpoint of international law and diplomacy, the situation in China is complicated in the extreme. Probably nowhere else in the world is there such a mixture of territorial rights with foreign privileges and understandings, of purely political engagements with economic and financial concessions, of foreign interests conflicting with one another and with those of the nominally sovereign State. "When a national government is wholly untrammelled with regard to the management of its own domestic affairs and has within its own hands the enforcement of law within its own territorial borders, its international rights and responsibilities are easUy determined by a resort to well-established principles of public law. But when, as in the case of China, we have a Power which permits the exercise within its limits of all kinds of extraterritorial rights or privileges ; when there exist within its territory spheres of interest, " special interests," war zones, leased territories, treaty ports, concessions, settlements, and legation quarters; when there are in force a multitude of special engagements to foreign Powers with reference to commercial and industrial rights, railways and mines, loans and currency; when two of its chief revenue services — the maritime customs and the salt tax — are under foreign overhead administrative control or direction; when the

2 FOEBIGN EIGHTS AND INTERESTS IN CHINA

proceeds of these and other revenues are definitely pledged to meet fixed charges on foreign indebtedness ; when, at various points within its borders, there are stationed considerable bodies of foreign troops under foreign conunand — when we have these and other phenomena all carrying with them limitations upon the free exercise by the central government of its ordinary administrative powers or its discretionary right to deal as it deems best with the individual nations with which it maintains treaty relations, we then have a condition of affairs which furnishes abundant material not only for theoretical or academic discussions by students of international jurisprudence, but for serious conflict and disputes between the nations concerned. It is clear, then, that before one can hope to have an understanding of the political situation in the Far East, and be qualified to form an intelligent judgment regarding the policies which the several nations should adopt with reference to China, a knowledge must be obtained of at least the general facts regarding the rights which foreigners have in China and the " special interests " or " spheres of interest " or other preferential claims which certain of the Treaty Powers have asserted in that country. This information the writer seeks to supply in this volume.

The writer has not deceived himself nor does he wish to mislead his readers with the idea that he has made a complete statement of the situation. But he hopes that his account will be found helpful, if not fully adequate, and at least of value as an introduction to those who desire to penetrate farther into the complexities of China's diplomacy and of her present international status.

USTTEODTJCTION 3

Difficulty in Determining China's International Commitments. In connection with this disclaimer of comprehensiveness the fact should be mentioned that, under any circumstances, it is practically impossible to make a complete statement of the engagements which have been entered iato by China with foreign Powers or with their nationals. In the first place, there is the difficulty that presents itself when dealing with the diplomacy and international relations of any country, that none of the Foreign Offices of the world have been willing to publish in fuU the correspondence between themselves and their diplomatic representatives stationed abroad, and that even the portions of such correspondence as finally are made public often appear only years after the dates they bear. And, even as to the treaties themselves, as is well known, many agreements exist that are known only to the parties signatory to them or to their allies. Perhaps the time will come when all covenants will be open and openly arrived at, but as yet that era has not arrived.

But in the case of Chiaa's international relations the peculiar difficulty confronts the student that there are many instances in which China has committed herself, in writings or even conversations of a most informal character, which have not been recorded or made public, and which are only presented when the party claiming under them a beneficial interest deems the time opportune for doing so. Still further, that in many, if not most of these cases, the State of China has been held bound by promises which have been made, or are alleged to have been made, by individual Chinese officials upon their own personal responsibility.

As an illustration of this we may take the following extract from a newspaper statement by Mr. W. F. Carey, head of the American Siems-Garey Company, in which he describes some of the difi&culties with which he had to contend in the attempt to locate the railways for the eonstrnction of which his company had obtained concessions from the government of China. After speaking of having overcome obstacles imposed by the " spheres of interest " of the different nations, he found that he had still another bridge to cross. He says:

Shortly after we secured the concession for this line and commenced our active surreys thereon, the British protested to the Chinese Government on the ground that ia 1910 a certain Gov. John, of the provinces of Honan and Hupeh, had written to a British Consul stating that, in appreciation of assistance rendered hy the latter in securing a loan, the Governor thereby granted to certain British interests the privilege of furnishing any fiinds that might be required in the future for railway construction throughout the aforesaid provinces. "WMle I have no personal knowledge of the details culminating in this transaction, I am satisfied that the alleged concession constituted the basis of the assistance rendered to the British interest in the premises." "In order to become valid," Mr. Carey continues, " according to Chinese law, this document should have'had the sanction of the throne, for at that time China was an empire. After receiving this sanction, the document would go into the files of the Minister of Communications, who has charge of all China's government railways. To my knowledge, it was never clearly shown that this agreement received the sanction of the throne, and as far as I know it was not resting in the files of the Minister of Communications. The Chinese, as a matter of fact, were as much astounded as we were when the British produced the document.^

'It is perhaps worth mentioning at this point that the Viceroys or Provincial Governors in China paid no great heed to the orders of the Central Government. Previously to this time, the Peking Government had issued a mandate declaring that it would not be responsible for contracts

INTRODUCTION 5

Another illustration of the same kind is noted by Mr. Putnam Weale in his recent volume, The Fight for the Republic in China. He cites the protest made in 1917 by- France against the building of a railway in Kwangsi by Americans and financed by American money, the protest being based upon a letter sent by the Chinese Minister of Foreign Affairs to the French Legation in 1914 with reference to a frontier dispute. The letter contained the following paragraph: " In order to demonstrate the especially good friendly relations existing between the two countries the Eepublican Government assures Your Excellency that in case of a railway construction or a mining enterprise being undertaken in Kwangsi Province in the future, for which foreign capital is required, France would first be consulted for a loan of the necessary capital. On such an occasion,' the Governor of Kwangsi will directly negotiate with a French syndicate and report to the Government." ^

Many Agreements not Ratified by the Chinese Parliament. Since 1911 China has been governed, in theory at least, under a written constitution which provides for a National Parliament and that that body shall have the right " to decide the amount of public loans and agreements involving any obligation on the state treasury." Furthermore, the President is given the authority to conclude treaties only with the approval of the Parliament. As a matter of fact, however, little regard has been paid

or other engagements entered into without its consent by the local authorities, but this had not prevented such agreements being entered into with foreign concerns. The Gov. John referred to by Mr. Carey was probably Viceroy Chang Chih-tung. ' Op. cit., p. 306, note.

6 POEEIGN EIGHTS AND INTBEBSTS IN CHINA

to these provisions, and a large number of foreign loans have been contracted, for which the Chinese State is held responsible, but which have not been submitted for approval to the [Parliament. In some cases, not even the President or the whole cabinet has been consulted, nor have the texts of the loan agreements been made public. These loans, in almost all cases have been made by Japanese banks or other Japanese financial interests, and, for the most part have been negotiated, not through the Japanese Legation at Peking or the Chinese Legation at Tokyo, but by a pseudo unofficial Japanese agent. The important military and naval agreements of March, 1918, which were entered into between Chiua and Japan, were negotiated not by the two Foreign Offices, but by military representatives of the two countries, and their texts were not made public until this was practically forced at the Paris Peace Conference.

Both in ethics and in international law it might be possible to raise a question as to the obligation imposed upon the State of China by promises made by minor officials, or even by cabinet ministers, who have had no constitutional power to make such promises on the part of their government, and who, in many cases, indeed, have acted without any authorization from the President or the Cabinet. Even where moneys have been paid over and expended by these officials the point might conceivably be made that the parties advancing the moneys have had knowledge of the fact that the agreements under which they were advanced were without validity as tested by Chinese law and that therefore they acted at their own risk as to whether the Chinese Government would assume the obligation of making repayment. Especially, in

INTRODUCTION 7

equity, miglit such a point be made against the manyloans which the Japanese have made to various of the Chinese authorities in view of the fact that it was well known to them that the sums thus advanced would be used by the northern military party in China to continue the civil war against the forces of the southern and southwestern provinces which at that time did not recognize the de jure character of the government at Peking, and that thus the welfare of China would be hindered rather than benefited by the loans thus made. However this may be, the fact is that at the present time it is impossible to determine all of China's obligations to foreign powers or to their nationals by an examination of the treaties or other agreements which have been formally approved by the Government at Peking. Even that government itself does not know all of its commitments.

In connection with this matter of China's international commitments it is of interest to remember that the entire action of the Chinese Peace Delegation at Paris, in 1919, and the contemporaneous popular opinion in China, was based upon the contention that the Chinese Nation should not be held bound by the treaties and other agreements with Japan made during the period of 1915 to 1918, all of which lacked parliamentary approval, and some of which were the result of an ultimatum threatening iromediate military pressure in case they were not signed. So far as public opinion in China can be definitely determined it would appear that the Chinese are and have been in favor of repaying all moneys actually received through loans irrespective of the manner in which those loans were contracted or the manner in which their proceeds were spent. Chinese public opinion has not favored, however, the continued recognition of the special rights and incidental obligations created by those loans or other agreements.

Most Favored Nation Clause in Its Application to China.

As preliminary to an understanding of the treaty relations between China and the other powers, it is necessary to say a word regarding the operation of the Most Favored Nation principle, for it is this principle that has operated, automatically, to extend to all the Treaty Powers those special rights which, from time to time, China has been led or compelled to grant to particular Powers. As a matter of fact, however, with reference to many of the more important rights which foreign nations and their nationals have in China, China has entered into separate and several treaties with the different Treaty Powers concerned. One important fact which has resulted from this is that China now finds herself so circumstanced that she is unable to escape from these limitations upon her freedom of action except with the unanimous consent of all the Powers to which she has severally bound herself — a consent which experience has shown it is almost impossible for her to obtain.

The sphere within which, according to established principles of iutemational law, the doctriae of the Most Favored Nation is applicable, does not appear to be exactly determined, but, in general, it may be said to include matters of navigation and commerce, that is, ' ' the regulations governing importation, exportation, transit, trans-shipment, warehousing, customs, tariff; the rights of navigation (light anchorage, pilotage, buoys, etc.) quarantine; transit charges on streams and canals; lying-in of vessels in ports and basins ; storage of merchandise in bonded warehouses ; fisheries ; rights of pos-

INTEODUCTION 9

session and transmission of movable or immovable goods ; payment of, or exemption from imposts; extraordinary contributions and forced levies; service in the army or militia; conditions of nationality, the establishment of consulates, etc., etc." ^

Mr. Herod says of the Favored Nation Clause :

While its use is not confined to treaties of navigation and commerce, but extends to consular, trade-mark, and other conventions, it is as broad as the basis of the treaty in whidh it is employed, and is intended to include all subjects which fall properly under the general heading or title of the formal agreement. But it does not need to be said that, by its very nature, it can have no application to agreements of a political nature.

Professor S. K. Hombeck, who has given us the most recent, as well as the most satisfactory discussion of the Most Favored Nation Clause,* states its limitations as f oUows :

It is not intended that the clause shall operate so as to afEect the internal policy of the State; it applies solely to treatment of foreign States, that is, to the relative treatment of the citizens and the commerce of foreign States. It is not usually considered as comprehending special arrangements and reciprocity between nations, where on account of proximity or special circumstances, reason exists for relations which cannot be shared by the world at large. Special relations between a colony and the mother country are generally underwood to be exempt from the operation of the clause.

Two quite different constructions have been given by the different nations to the operation of the clause. According to what has come to be known as the American

' Herod, Favored Nation Treatment, p. 2.

*In three articles in the American Jownal of International Law, Vol. m, pp. 395, 691, and 797.

10 FOREIGN EIGHTS AND INTEEBSTS IN CHINA

view, other nations are not held entitled to the privileges granted by the contracting States unless those nations furnish the same considerations or make the same reciprocal concessions which the contracting States had furnished or made to each other.

This doctrine is set out and argued by the United States in correspondence extending over fourteen years relating to a claim made by France under the favored nation clause contained in a treaty entered into in 1803 between France and the United States for the cession to the latter of the Louisiana Territory.

Opposed to this doctrine is the one especially favored by nations pursuing a policy of free trade which asserts that any commercial or non-political privilege granted by one State to another State may be claimed by other States who have been promised most favored nation treatment by the State granting the privilege, and this without regard to whether the State thus claiming the privilege makes or is in a position to return therefor a quid pro quo corresponding to that upon which the granting of the privilege in question was made.^

Dispute as to which of the two foregoing doctrines of most favored nation treatment shall be applied can be, and now often is, prevented by specifying, where the most favored treatment is promised, whether it is to be construed to be conditional or gratuitous.

The most favored nation clause made its appearance in China at practically the beginning of its treaty rela-

" For an account of most favored nation clauses in American treaties, see Moore's Digest of International Law, Vol. v, Sec. 765. See also the article by A. H. Washburn, "The American Interpretation of the Most Favored Nation Doctrine," in the Virginia Law Review, January, 1914 (Vol. i, p. 257).

INTRODUCTION 11

tions with the Western Powers. In the so-called Supplementary, or Hoomnn-Chai, Treaty of 1843 with Great Britain, it was provided (Article vin) :

The Emperor of China having been graciously pleased to grant to aU foreign countries "w^hose subjects, or citizens, have hitherto traded at Canton the privilege of resorting for purposes of trade to the other four ports of Foochow, Amoy, Ningpo, and Shanghai, on the same terms as the English, it is further agreed, that should the Emperor hereafter, from any cause whatever, be pleased to grant additional privileges or immunities to any of the subjects or citizens of such foreign countries, the same privileges and immunities will be extended to and enjoyed by British subjects; but it is to be understood that demands or requests are not, on this plea, to be unnecessarily brought forward.*

Clauses similar, and even broader than this,'' were soon after included in treaties between China and the other Powers. The result, of course, is that in order to determine what treaty rights a particular nation has in China it is necessary to ascertain what privileges or immunities of a commercial or economic nature have been granted by China to any of the other Treaty Powers.*

Chinese Circular of 1878. In the Circular of 1878 sent by the Chinese Foreign Of&ce to its ministers abroad, the following complaint was made :

• Customs Treaties, i, p. 393.

' For example, in the Treaties of Tientsin of 1858, it was provided that the nations concerned should enjoy the privileges or immunities which " may have been or may be hereafter granted."

'With reference to the operation of the most favored nation clause in China, see especially Chapter iv of Tyau's The Legal OUigations Arising Out of Treaty Relations between China and Other States; and an article by Kuo Yfin-Kuan entitled "The Legitimate Bounds of Most Favored Nation Treatment in China," in the Chinese Social and Political Science Review, Vol. I, p. 40 (April, 1916).

The Most Favored Nation Clause is found in all the treaties and it is well that it should be so ; for it is difficult for China to distinguish between foreigners, or say which belong to which nationality; and so much is this so, that even nion-treaty power foreigners are trusted like the others. The object of the foreign negotiator in introducing this clause was to prevent his own nationals from being placed at a disadvantage as compared with others, and to secure that aU should be equally favored. Now, this is precisely what China desires. But foreign governments, although their objects in negotiating for the most-favored-nation clause were similar to those of China, are not always fair in their interpretation of it. For example, if China, for a consideration, grants a certain country a new privilege on such and such conditions, this would be of the nature of a special concession for a special consideration. Should other countries come forward and, in virtue of the most favored nation clause, claim to participate in the new privilege, although China need not necessarily exact a similar consideration in return, yet it would he only just to expect that in enjoying the privilege they would consent to observe the conditions accepted by the power to which it was originally granted. But, far from this being the case, there are some who, while demanding the privilege, refuse to be bound by the conditions attaching to it. This is the imfair interpretation to which China objects. In a word, as regards this most favored nation clause, we hold that if one country desires to participate in the privileges conceded to another country, it must consent to be bound by the conditions attached to them, and accepted by another."