Senator BRANDEGEE. I would not want any decision to assure me of that. Senator CUMMINS. Why does not the President, then, negotiate a treaty authorizing the dealing of these people in China?

Mr. HACK WORTH. I think he could do it by treaty-that is, it could be done under treaty-but. I think it could be handled more readily by Congress. I have no doubt that there could be a treaty negotiated to handle this matter in a manner similar to that which is proposed by this bill.

But it seems to me that the strong point in favor of this bill is that we are under obligation to enact proper laws for the conduct of our citizens in China. Senator CUMMINS. Undoubtedly Congress has authority to enact any law that is necessary to carry out the provisions of a treaty. I think no one would question that. And your position is that this bill is a law that at least is appropriate to effectuate the provisions of the Chinese treaty?

Mr. HACK WORTH. Exactly.

Senator CUMMINS. I think we are coming finally to some definite idea. I had not thought about it along that line.

Senator BRANDEGEE. That has not been suggested before. That would be a valid stand to take, if that be true; if this purposes to carry out the provisions of a treaty.

Mr. HACKWORTH. It does carry out the provisions of a treaty to the extent that we endeavor to control our own nationals. Now, if it is necessary to enact legislation to provide for the conduct of our people in China, then it is a provision for carrying out a treaty. If these people go over there and see fit to get out from under our conrtol by organizing a corporation under some foreign law, then we lose control over them as a corporate entity.

Senator BRANDEGEE. We do not lose control over them as citizens.

Mr. HACKWORTH. But they organize a corporation under the laws of another Government and we lose control over the corporation.

Senator CUMMINS. Will you read, if you have it before you, those provisions of the treaty which you think would be expedited by the passage of this law? Mr. HACKWORTH. There are several treaties, beginning with the treaty of 1844, and coming down to the treaty of 1903.

Senator CUMMINS. Will you put into the record a copy of the treaties which you think relate to this particular subject, and which do confer jurisdiction or power on Congress to enact legislation? I think it would be helpful.

Senator BRANDEGEE. Yes.

Mr. HACKWORTH. I can indicate the provisions. The first would be article 21 of the treaty of 1844, and also article 25 of the same treaty, which are as follows [reading]:

"ARTICLE 21. Subjects of China who may be guilty of any criminal act toward citizens of the United States shall be arrested and punished by the Chinese authorities according to the laws of China, and citizens of the United States who may commit any crime in China shall be subject to be tried and punished only by the consul or other public functionary of the United States thereto authorized according to the laws of the United States; and in order to the prevention of all controversy and disaffection, justice shall be equitably and impartially administered on both sides.

"ARTICLE 25 [substance]. All questions in regard to personal and property rights between citizens of the United States are subject to regulation of their own Government.

"Controversies between citizens of the United States and those of other countries are to be regulated by treaties existing between the two countries without interference by China."

Also articles 11 and 28, of the treaty of 1858, as follows [reading]:

TREATY OF 1858.

"ARTICLE 11. * * * Subjects of China guilty of any criminal act toward citizens of the United States shall be punished by the Chinese authorities according to the laws of China; and citizens of the United States, either on shore or in any merchant vessel, who may insult, trouble, or wound the persons or injure the property of Chinese, or commit any other improper act in China, shall be punished only by the consul or other public functionary thereto authorized, according to the laws of the United States. Arrests in order to trial may be made by either the Chinese or the United States authorities.

"ARTICLE 28. All questions in regard to personal and property rights between citizens of the United States subject to regulation of their own Government.

"Controversies between citizens of the United States and those of other countries to be regulated by treaties existing between the two countries without interference by China."

Article 4 of the supplemental treaty of 1880, as follows [reading]:

SUPPLEMENTAL TREATY OF 1880.

"ARTICLE 4. When controversies arise in the Chinese Empire between citizens of the United States and subjects of His Imperial Majesty which need to be examined and decided by the public officers of the two nations, it is agreed between the Governments of the United States and China that such cases shall be tried by the proper official of the nationality of the defendant. The properly authorized official of the plaintiff's nationality shall be freely permitted to attend the trial, and shall be treated with the courtesy due to his position. He shall be granted all proper facilities for watching the proceedings in the interest of justice. If he so desires, he shall have the right to present, to examine, and to cross examine witnesses. If he is dissatisfied with the proceedings, he shall be permitted to protest against them in detail. The law administered will be the law of the nationality of the officer trying the case."

The citation of the treaty of 1903, I have not with me.

Senator BRANDEGEE. You can put that in?

Mr. HACKWORTH. Yes, sir.

(The part of said treaty referred to was afterwards furnished by Mr. Hackworth, and is here printed in full, as follows:)

TREATY OF PEACE, AMITY, AND COMMERCE.

ARTICLE XXI. Subjects of China who may be guilty of any criminal act toward citizens of the United States shall be arrested and punished by the Chinese authorities according to the laws of China; and citizens of the United States who may commit any crime in China shall be subject to be tried and punished only by the consul or other public functionary of the United States, thereto authorized, according to the laws of the United States. And in order to the prevention of all controversy and disaffection, justice shall be equitably and impartially administered on both sides.

ARTICLE XXV. All questions in regard to rights, whether of property or person, arising between citizens of the United States in China shall be subject to the jurisdiction of, and regulated by, the authorities of their own Government. And all controversies occurring in China between citizens of the United States and the subjects of any other Government shall be regulated by the treaties existing between the United States and such Governments, respectively, without interference on the part of China.

It might be interesting to the committee also, in considering this question, to take into account the provisions of section 4086 of the Revised Statutes. By that section we extend to American citizens in China the jurisdiction, criminal and civil, of the United States.

Senator CUMMINS. Have you that here?

Mr. HACK WORTH. Yes, sir; it reads as follows [reading]:

66 LAWS APPLICABLE TO EXTRATERRITORIAL JURISDICTION IN CHINA.

"SEC. 4086, Revised Statutes. Section 4 of the act of 1860.

66

'Jurisdiction in both criminal and civil matters shall in all cases be exercised and enforced in conformity with the laws of the United States, which are hereby, so far as is necessary to execute such treaties, respectively, and so far as they are suitable to carry the same into effect, extended over all citizens of the United States in those countries and over all others to the extent that the terms of the treaties, respectively, justify or require. But in all cases where such laws are not adapted to the object, or are deficient in the provisions necessary to furnish suitable remedies, the common law and the law of equity and admiralty shall be extended in like manner over such citizens and others in those countries; and if neither the common law nor the law of equity or admiralty nor the statutes of the United States furnish appropriate and sufficient remedies, the ministers in those countries, respectively, shall, by decrees and regulations which shall have the force of law, supply such defects and deficiencies."

Senator CUMMINS. Is there anything else?

Mr. HACKWORTH. I would like to remark that it seems to me that Congress had in mind at the time of the enactment of this provision of law the very thing that I am now trying to indicate, namely, that wherever it is necessary to extend our laws regarding American citizens to carry out treaty provisions, Congress has the authority to do it.

Senator CUMMINS. The only thought in my mind that is still to be settled by reflection is that we are doing more for our people in China than we are doing for our people here in the United States. That is one of the difficulties about trying to found the bill upon the provisions of the treaty. However, we will examine that carefully. That is a point of great interest, and we will examine it from the standpoint of those who really want to find some foundation for this bill.

If that is all, we will hear Mr. Denby. Is there anything further?

Senator BRANDEGEE. I do not care for anything further.

Senator CUMMINS. We thank you very much, Mr. Hackworth.

Mr. Denby, do you want to be heard?

Mr. DENBY. I would like to be heard five minutes.

STATEMENT OF MR. CHARLES DENBY.

Mr. DENBY. Senator, for the sake of brevity, I want to dwell on one or two controverted points here.

Senator CUMMINS..State your name, and give your opportunities for having become familiar with trade and commercial operations in China, and so on. Mr. DENBY. I have been a resident in China for 35 years; secretary of the legation at one time, and consul general in Shanghai, and advisor to the consul, and some years in commercial life in China.

The particular point I want to refer to here is this, the necessity and our plain duty to enact laws which we have a perfect right to enact, and which will not deprive China of any rights, but will encourage Chinese to assist in the development of their own country. China has no opportunity to protect itself against the blue-sky operations, or to pass blue-sky laws, and if the Chinese are to be protected against any improper plans and operations of the American people it must be done under laws enacted by the United States. Under our laws it is possible to incorporate under the laws of 48 different States. The provisions of those charters are not essentially the same. The Chinese merchant dealing in cotton goods might find to-day that he had dealt with a man having a West Virginia corporation, and he might have a difficulty with him and go to court with him and get a decision in his favor on that charter.

He might, the next year, be dealing with a man who has a Connecticut charter, or is organized under the laws of Connecticut, and remembering his former experiences, and not knowing that the laws may be radically different, would rely on his former decision, and would thereafter find that he had dealt with a man who had a radically different charter. We, therefore, put ourselves in the attitude of so confusing the Chinese in regard to our corporation law that no man can hope to find out, within a generation or two generations, what he does have. It seems to me there perhaps comes a possible justification for a commerce jurisdiction. If you have not the power to enact a company law, you have at least the power to regulate it. The only way to regulate it is, you have to start under a new charter. That is one point.

Now, we need a law very much, because we want Chinese capital to operate with us. It will operate in this way: A Chinese will come to me and say, "I have the right to put an electric light plant in a certain city, and it will require $700,000; I will put in $500,000; will you put in the other $200,000?" My only safeguard is the laws of my own country. Now, that is another point.

Now, to take up one or two points that have been mentioned here: One is that extension of a franchise by the Secretary of Commerce. I do not think that is essential at all. The Chinese knows, when he gets into an American company, he is doing business with a man under the laws of the United States, and not Chinese law at all. I do not see any possibility for any understanding in that.

The United States court is a court where every day in Shanghai there is rendered a decision in favor of an American, and that has never been the subject of a diplomatic controversy. I can not see how a Chinese investor can be hurt by radical suppression of his company, if he felt it was done for the protection of the United States. As a matter of fact, without this law at

all our consuls would not allow a man to conduct himself in such a way as to hurt the material interests of the United States. This is not a new thing at all; it is merely a new expression of it. Our district attorney, Mr. Holcomb, would undoubtedly concede this one point.

Now, the question was asked whether State corporations have actually done any harm. There has been some talk, chiefly on the ground that they are not identical. The Chinese does not know with whom he is dealing and does not know the extent of the charter.

Senator BRANDEGEE. They know where a company has been doing business with them for years and treated them honestly, whether it has a State corporation

Mr. DENBY (interposing). Absolutely.

Senator BRANDEGEE. For instance, the Standard Oil Co., and the American Tobacco Co., and the United States Steel Corporation are in good standing over there.

Mr. DENBY. Yes; absolutely. They have a good standing, just as individuals have. It is a matter of business with the Chinese.

There has been no gross misrepresentation. That one feature is very es sential. We have had companies organized with a nominal capital, who have done some harm there by misrepresentation, but I will not mention any names, because they have mended their ways, and I will not mention names.

Senator CUMMINS. They were organized under the State laws; those should be revised.

Mr. DENBY. It is impossible—of course, I am not a lawyer, but I think it would be impracticable to revise the laws of 48 States. But we can make a national law so much better than the State law, and then the State charters will die out. I haven't any doubt that if we enact some such law we will have $10,000,000 under the American flag within a few years, because they like us. There is no use dwelling on that point, but they would rather come under an American charter than under a British charter. The field is wide, and I think you gentlemen of the Senate have the absolute power to reform the situation.

Our citizens are two kinds, corporate citizen and the natural citizen. We can not allow the corporate citizens to run wild any more than we can the natural citizens. That is all, I think, gentlemen. It is a great big field; it is wide open to us; it is absolutely in the power of the United States. It is our plain duty to regulate the situation. I thank you.

Senator CUMMINS. It was very kind of you, Mr. Denby, to make the statement.

Is there anything else?

Mr. CHAMBERLAIN. I think the committee would like to hear Mr. Holcomb. STATEMENT OF MR. CHAUNCEY P. HOLCOMB, DISTRICT ATTORNEY FOR THE UNITED STATES COURT FOR CHINA.

Mr. HOLCOMB. I am originally from Delaware, but for the past six years I have been District Attorney for the United States Court for China, and as such I have had, perhaps, as good and ample an opportunity to find out the condition of American corporations in China as anyone.

I would first like to suggest that if I had the honor to be a Member of Congress or a Member of the Senate of the United States, that I would cer tainly consider passing the proposed bill that is before you under the treaty clause of the Constitution rather than under the power to regulate commerce be tween States. When we obtained extraterritorial rights in China, 70 years or more ago, China conceded and granted to America the exclusive jurisdiction over American citizens. It is needless for me to say that at that time there were very few corporations in operation. The class of business men who went there, from the accounts we have of them, were first-class business men and men of high ideals, and that, no doubt, tended a great deal to make the Chinese think of us in the complimentary manner that I think they do even to-day, but I am sorry to say, certainly from my experience in the last six years, that many corporations from Delaware, Maine, Arizona, West Virginia, and various States, have come there that I consider, a great many of them, wildcat corporations. There is absolutely no way of having any supervision over them unless they really break some law of the United States. Senator BRANDEGEE. This bill would not stop that.

Mr. HOLCOMB. No, sir; it would not stop it, but, as Mr. Denby has just said, and I agree with him, that many of the Americans who go there seek Chinese

assistance, which means capital, which means business, because a Chinese who has capital invested in the business is going to hustle and get business. Now, they won't take up with a man who has a Delaware charter, or an Arizona charter, but if they have a charter that is supervised by the United States they will; that is, it is my judgment that they will.

Now, I might state a case in point to show how futile it is to try to control corporations there: Four years ago there was organized a corporation--it may be the one Mr. McMurray spoke of-the Oriental Trust & Banking Co., I think it was; they got a charter of $5,000,000 gold-that is, in round figures. After they got through their corporation papers in Delaware they changed all their board of directors to Japanese. They wanted to come to China and engage in the banking business. Even in Delaware they do not allow a banking business to be conducted under a general charter; they must go to the general assembly and get their charter, which they did not do. The only way they were kept from doing business was that the consuls and the State Department, where they wanted to do business in China refused them recognition. But there is no compulsory registration law in China; they might have started doing business there, but after they received that reception they did not do any actual business until about a year ago, when they started a lottery, which is absolutely against the American law; that is, we found some lottery tickets. But, even if we had found the corporation officers, we could not have arrested them, because they are Japanese, and as such, are entirely under Japanese courts. We could, perhaps, have taken the books, but if these were in a Japanese house we would have had to go through a Japanese court to do that. I mention this to show the condition that exists now.

But I firmly believe if this legislation is passed it can be passed under the treaty, which-I will not say is above the Constitution, but it is certainly equal to statute law. Here is a treaty whereby we are allowed to trade with China, and existing legislation to carry the treaty into effect does not cover the situation fully, but we have cured that by this bill by making a citizen of the corporation, and that corporation then comes under the treaty as an American citizen permitted to do business in China. I am not constitutional lawyer enough to say whether you could pass the pending bill under the clause regulating commerce between the States. I think you have something higher, or at least as high-a treaty ratified by the Senate of the United States and which has been in existence since 1844. Congress has passed acts a number of times under that and put them into effect. It passed the act creating the United States Court for China; it passed several amendments to that. It passed the act mentioned by Mr. Hackworth about the practice of pharmacy. Now, I would like to call attention to the use of the Alaska statutes for corporations in China. On account of the trouble of getting articles of incorporation from the States and waiting three or four months, and the Chinese being more or less suspicious of them, somebody dug up the Alaska law and applied to the court for an interpretation of it, and to my recollection 40 charters have been granted under it. I think if this pending legislation can not be passed that the Alaska law, with some amendments, might be utilized. But if this proposed law is passed it will put American corporations on a plane that they have not been on since American corporations came into China. Senator CUMMINS. We are very glad to have heard from you.

Mr. CHAMBERLAIN. I may want to say something later; I do not believe I can be heard very well this evening. Do you care to say anything, Mr. Dodson? Mr. DODSON. I would like to be heard briefly.

Senator CUMMINS. We will hear you very briefly.

STATEMENT OF MR. W. D. B. DODSON, MANAGER OF THE CHAMBER OF COMMERCE, PORTLAND, OREG.

Mr. DODSON. My name is W. D. B. Dodson; I am manager of the Chamber of Commerce in Portland, Oreg., and I am delegated here to speak for certain business interests in that city; delegated here for that purpose.

I think Senator Brandegee spoke of certain men and about those men who wanted to lift the lid in China and go to the blue sky. Absolutely the opposite is true; we want to put the lid on. The whole theory is to put the lid on and give the very highest form of business.

Senator BRANDEGEE. That was not my product; that was Mr. Hoover's proposition.

Mr. DODSON. Probably it was Mr. Hoover who suggested that.