Pan American Airways or whether they were asking us to agree to the extension of automatic facilities in the event that we should grant rights to some third power to fly over the transpacific route during the period of five years covered by the permit to be issued by the Governor of Hong Kong to Pan American Airways. Mr. Mallet said that he would look into it and let me know. He called me the next day to say that he had studied the matter thoroughly and that the purpose of the British in sending the note was simply to notify us of their understanding with Pan American Airways. He said categorically that they were not asking us for commitment now, they only wanted us to understand that if, during the period of five years covered by the permit to Pan American Airways, we should grant flying facilities to some third power and decline a British request for reciprocal privileges, the permit of Pan American Airways would be cancelled. 811.79690 Pan American Airways/67 The Secretary of State to the British Chargé (Mallet) WASHINGTON, August 29, 1936. SIR: The receipt is acknowledged of the Ambassador's note No. 213, of July 11, 1936, with which was enclosed a copy of a communication addressed to Pan American Airways Company by the Secretary of State for Air, in which there are set forth the conditions upon which that company is granted permission to operate an air service into, through, and away from the colony of Hong Kong. My Government is appreciative of the courtesy of His Majesty's Government in bringing to its attention the terms of the permission granted to this American company. In the second paragraph of the Ambassador's note the following statement is made: "It will be observed from the latter document that His Majesty's Government have decided not to enforce for the time being the normal requirement of reciprocity in return for the granting of these facilities, but have nevertheless felt obliged to state that the grant to the Company of operating facilities in Hong Kong for a period of five years is on the understanding that, if during this period facilities are afforded by the United States Government to other nations to operate air services on the trans-Pacific route, similar facilities will automatically be afforded for the operation of British air services on that route." In this connection, I wish to state that, if during the period under reference facilities are afforded by the United States Government to 'Latter not printed. other nations to operate air services on the route under reference, this Government will of course be prepared to give sympathetic consideration to an application, if made, for operation by a British company of an air service on that route; but, as this Government desires to consider each such action on its merits as it arises, I am not in position at the present time to give an assurance that such facilities will automatically be afforded. Accept [etc.] For the Secretary of State: 811.79690 Pan American Airways/76 The Ambassador in China (Johnson) to the Secretary of State No. 697 PEIPING, September 11, 1936. [Received October 5.] SIR: I have the honor to refer to previous correspondence relative to the Pan American Airways, Inc., and to report that a member of my staff was informed confidentially by Mr. Harold M. Bixby, chief American executive of the China National Aviation Corporation, in Shanghai on September 3 last, that negotiations for facilities for the Pan American Airways, Inc., at both Macao and Hong Kong making possible the linking of that company's service with that of the China National Aviation Corporation would culminate favorably within a short time. Mr. Bixby said that due to British pressure the contract which the Pan American Airways had submitted to the Portuguese Government, which had been approved by the Governor of Macao, had been rejected at Lisbon, and that the proposal made by the Portuguese authorities in return contained so many unacceptable provisions that it was impossible to revise it into a compromise draft. Mr. Bixby had assisted in drafting an entirely new contract when he arrived in New York recently after a seven-day flight from Manila, and that contract had been submitted to the Portuguese Government with virtually no hope on the part of the Pan American Airways officials that it would be accepted. They feared that an impasse in the negotiations with Portugal had been reached. Much to their astonishment, however, the British pressure apparently having been relinquished, possibly due to the British authorities' decision to invite China to send planes to Hong Kong and to Great Britain's preoccupation with the situation in Spain, the draft was accepted in toto. This action was particularly gratifying to the Pan American Airways since the draft included provisions for rights in the Azores even more important to the trans-Atlantic service than the rights in Macao to the trans 919456-54-47 Pacific service. Mr. Bixby said that it only remained now for the Portuguese authorities to invite the Chinese Government to send planes to Macao to connect with the service of the Pan American Airways, Inc. He understood that such action would be taken. The Pan American Airways, Inc., are glad to have this link as an auxiliary or reserve and so as to maintain a stronger position vis-à-vis the British. Mr. Bixby said, moreover, that the China National Aviation Corporation would probably establish some sort of service with Macao despite the fact that its main terminus would be in Hong Kong. The British in their negotiations with China had held out for three privileges: most-favored-nation treatment, the right to fly over China, and permission to land in Chinese territory in case of emergency. The Chinese authorities had finally been persuaded to grant the first and last of these privileges but were not willing to grant permission in writing for British aircraft to fly over Chinese territory in view of their reluctance to grant the same right to the Japanese. Upon an intimation from an American source, however, that the Chinese authorities would in fact have no objection to the flight of British planes over Chinese territory provided the right to do so did not have to be stated publicly or in writing, the new Governor of Hong Kong consented to relinquish this point in the negotiations, and arrangements have already been made for the inauguration of the China National Aviation Corporation service with Hong Kong. Mr. Bixby felt, moreover, that as soon as the Governor, who is ill at present, is able to give consideration to the final details of the agreement providing for air facilities for the Pan American Airways, Inc., in Hong Kong the whole matter would be satisfactorily concluded. Mr. Bixby remarked incidentally that trans-Pacific passenger service between Manila and San Francisco would be inaugurated on or about November 1, 1936. Respectfully yours, NELSON TRUSLER JOHNSON 811.79690 Pan American Airways/83 The Consul at Hong Kong (Donovan) to the Secretary of State No. 430 HONG KONG, December 8, 1936. [Received January 4, 1937.] SIR: I have the honor to enclose herewith the articles of incorporation of the "Aeorportos Pan Americana de Macau, Limitada", a company which the Pan-American Airways was compelled under Portu Enclosures not printed. The Consul General at Hong Kong in his telegram of January 20, 1937, 3 p. m., stated: "The Crown Colony of Hong Kong and the Pan-American Airways have signed an agreement for the direct air transport of first class mail matter to and from the United States via the Philippines." (811.79690 Pan American Airways/84.) guese law to organize at Macao in order to operate their airport there. The capital of the company is HK$40,000. Under the articles of incorporation the Aeroportos Pan-Americana de Macau is empowered to construct, establish, and operate airports, aerodromes, hangars, workshops, and all ground facilities pertaining thereto, in the territory of Macao. The Society "may also engage in the representation, either through the means of agency or through other contracts, of commercial airlines as well as in their advertising, and also engage itself in the operation of airlines where such may promote its principal objects or its commercial interests." There is nothing unusual in the articles of incorporation which are routine under Portuguese law. The full text taken from the Boletim Oficial De Macau of October 31, 1936, is enclosed herewith. It is learned from reliable sources in Hong Kong that Japan is still desirous of establishing an air line from Japan to Bangkok but that their inability to obtain landing facilities at some point between Formosa and Bangkok is a stumbling block. It is difficult to see, however, how the British can refuse them facilities at Hong Kong when such privileges have been accorded to the United States and China, according to the same informant.* It is also understood that Great Britain would like to have landing facilities on Hainan Island but how actively they are pushing the matter cannot be ascertained. Respectfully yours, HOWARD DONOVAN ATTITUDE OF THE DEPARTMENT OF STATE WITH RESPECT TO THE APPLICATION OF CHINESE LAWS TO AMERICAN INSURANCE COMPANIES DOING BUSINESS IN CHINA 893.506/36 The Secretary of State to the Ambassador in China (Johnson) No. 111 WASHINGTON, March 9, 1936. SIR: The receipt is acknowledged of the Embassy's confidential despatch No. 20 (from Nanking) of October 17, 1935,10 in regard to a request made by the representatives in China of American insurance companies that representations be made to the Chinese Government with a view to obtaining certain modifications of the Insurance Enterprise Law, promulgated on July 5, 1935, which modifications the companies allege are essential for the proper conduct of insurance business in China by foreign companies. There are enclosed 11 with the des "For information regarding the establishment of Japanese civil aviation service with North China, see pp. 359-364, passim. *Mr. H. M. Bixby, Vice-President, Pan American Airways. [Footnote in the original.] 10 Not printed. "Enclosures not printed. patch copies of letters from the representatives of the American insurance companies giving their views on this legislation; a copy of a letter from the British Embassy transmitting copies of a note and a memorandum from the British Ambassador to the Chinese Foreign Office; and a copy of a memorandum, prepared by Counselor Peck,12 reviewing the position and rights claimed by the American insurance companies under existing treaties and setting forth his conclusions. The Embassy states that it is in substantial accord with the conclusions reached on Counselor Peck's memorandum which are to the effect that the treaties do not confer on American insurance companies the right to operate in China in disregard of Chinese laws and it requests the Department's instructions as to the nature of the rights which may be claimed by the American insurance companies in China and as to the nature of the recommendations, if any, which the Department desires that the Embassy make to the Chinese Government in the matter. It is observed that the request of the American companies appears to be based on the contention that under existing treaties they "are under no legal obligation to comply with any regulations issued by the Chinese central or local authorities" and that although they do not request complete exemption from the application of the Insurance Enterprise Law they have registered definite objection to the application to them of certain provisions of the law, particularly the provisions relating to registration, guarantee deposits, limitations of activities of insurance companies to treaty ports, et cetera. The companies have not cited any particular treaty or treaty provisions in support of their claim to exemption from Chinese regulation of their business. With a view to determining whether their claim has any treaty basis, the Department has examined all treaties between the United States and China which are in force. This examination has disclosed that there is no treaty provision which specifically confers any rights on or grants any exemption to American insurance companies as such in China. However, Article III of the Treaty of 1903 13 contains the following provision which seems to be pertinent to the question under consideration: "Citizens of the United States may frequent, reside and carry on trade, industries and manufactures, or pursue any lawful avocation, in all the ports or localities of China which are now open or may hereafter be opened to foreign residence and trade; . . (underscoring by Department). It is clear from the Chinese text of the treaty that the word "avocation" is used in the sense of vocation, or regular or habitual employment. 12 Willys R. Peck, Counselor of Embassy in China at Nanking. 18 Signed at Shanghai, October 8, 1903; Foreign Relations, 1903, p. 91. "Omission indicated in the original instruction. |