393.115/1–3046: Circular telegram
The Counselor of Embassy in China (Smyth) to the Secretary of State
[Received January 31—1:45 a.m.]
Taking over by Chinese Government of Japanese property in liberated areas raised question whether such property found on premises of American firm might be retained by firm. Discussion of this question with Foreign Office resulted in informal understanding that Japanese stocks and equipment found on premises of American firm would be considered property of firm whenever identical with or similar to stocks and equipment on premises when Japanese took possession. This principle applies to consumable goods as well as machinery and equipment. (Sent Hankow, Canton, Tsingtao, to Dept as circular January 30. Copies to Tientsin and Shanghai by airmail.)
Dept in telegram 27, January 4 to Embassy stated that above arrangement is considered excellent solution to immediate problem of aiding American firms, but stresses informal nature of understanding because of unqualified right of Chinese to confiscate all Jap property as war booty if appropriate or otherwise as debits to reparations account. Consequently, Dept adds, Embassy can support claims this basis only when property involved is similar to equipment removed, damaged or destroyed by them.
You are authorized to support locally claims of American firms to Jap property within the limits defined above, and to refer to Embassy any cases which cannot be settled locally.