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elsewhere against the Japanese and Russians, who are making the same attempt as Germany.
4. That the very fact that the Germans exact onerous conditions from would-be British landholders in their Concessions, makes it less likely than ever that British subjects will desert the British Concessions, and thereby injure the prosperity of those Concessions.
Everything points therefore to the advantage of continuing our present liberal system, even if the Germans adhere to the one which they have started. The tendency will merely be, if the Germans persist, for British subjects to be less inclined than ever to desert the British for the German Concessions.
Foreign Office, December 18, 1908.
British and German Settlements in China.
C. S. C.
Dr. Kriege, the German Delegate to the Naval Conference, asked if he might have some conversation with me on the above subject, and therefore, with Sir F. Campbell's assent, I went to see him at his hotel on Saturday last.
I read up the papers beforehand, but I attended the interview upon the footing that I merely desired to find out exactly what it is that the Germans desire.
Dr. Kriege assured me that difficulties of a legal kind have been experienced with regard to the enforcement of mortgages, and the execution of judgments in the "Concession" Settlements (ie., the Settlements which are held under lease by the Government from the Chinese Government, as opposed to the international Settle- ments where all landholders hold these lots by lease or title from the Chinese authorities). So long as each Power retains exclusive jurisdiction over its own nationals, there must of necessity be a conflict of jurisdiction in the case where a foreigner becomes the owner of a lot of land in a "Concession Settlement, if such Settlement is regarded as a place where the land of the Concession Sovereign is intended to apply: and this is the view the Germans take.
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Dr. Kriege maintained vehemently that this system is far the most convenient to the landholders themselves, because the power to borrow money on mortgage is of great value to them, and money cannot be safely lent on mortgage unless both parties know exactly their legal positions. He also asserted that it was extremely incon- venient to all parties that a judgment of a foreign Consular Court could not be enforced in a Concession Settlement without an application to the Consular Court of the Concession Power.
As to the first point, I told him I had never heard any complaints as to the inconveniences, though I admitted that, judicially, they must arise where a person of (A) nationality purchases a lot in a Settlement of (B) nationality and proceeds to mortgage it to a person of (C) nationality. I suppose the real explanation is that British subjects do not often buy land in foreign Settlements, and when they do and want to mortgage, they mortgage it to their own compatriots.
As to the second point, I said that, so far as I knew, the judgment of a foreign Court could be executed in a British Settlement without an application to the British Court; but I was told that without doubt in the French Settlements no such execution was allowed.
We then proceeded to the remedy. Dr. Kriege's desire is that a slight change should be made in the system of exclusive jurisdiction by each Power over its own nationals, and that in a British Concession the British Court should have jurisdiction in all matters relating to the land, and to the enforcement of municipal regulations over Germans-- the German Courts similar limited jurisdiction over British landholders in the German Concessions. He pointed out, and it is true, that there were only two German Settle- ments and six or seven British Settlements, and that they were offering us a jurisdiction five or six times as large as they would get in return. The arrangement would not apply to any of the international Settlements like Shanghae; in them the present conditions would continue unaltered.
I raised certain possible objections, e.g., that I was not sure whether our Treaties with China authorized our either ceding to Germany jurisdiction over British subjects in certain cases or exercising jurisdiction in certain cases over Germans, I also told him that Shanghae had commenced as a British settlement, and that Captain Balfour
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had been anxious to exercise jurisdiction precisely on the lines that the German Government now suggested, but that His Majesty's Government bad refused to consent, objceting to the idea of any exclusive jurisdiction, and holding that the object of a Settlement was merely to facilitate commerce.
He told me he was aware that that was the history of Shanghae, but said that it was not a convenient system, and that the result was that the German Courts refused to recognize mortgages of Shanghac land.
I explained to him our system, ie., that we merely exacted from a foreign purchaser of land in a British Concession an undertaking by both him and his Consul that, if necessary, the Land Regulations of the Concession would be enforced upon him if action were taken in his Consular Court.
Dr. Kriege assured me, however, that in some cases we claimed a right to evict a foreigner who disobeyed the Municipal Regulations and confiscate his holding, and promised to give me details later.
The upshot of our conversation was that I told him Sir H. de Sausmarez would be in London in January, and I would obtain from him information with regard to mortgages and the execution of judgments. I also told him that now that we had the details of what he wanted we should be in a position to obtain reports from China on his proposals.
I expect that when he returns to London in January he will put the Embassy in motion to open negotiations.
The proposal is superficially reasonable enough, but it is to my mind open to all sorts of objections, and would thrust upon us a considerable jurisdiction that I should think would be no advantage in possessing. Incidentally, Dr. Kriege let out what I expect is the origin of the proposal, and that is that they want to create a Mortgage Bank, but they regard a "hypothec" on the German system as the necessary security in each case, and feel no certainty that the "hypothee" would always be enforced by the Court of a foreign mortgagor.
One great difficulty in the proposed arrangement is that all the land-renters in the British Concessions hold their lots on the terms that sale to a foreigner is permissible if the purchaser gives an undertaking by himself and his Consul that the Municipal Regulations will be enforced upon him. The requirement that a foreigner should submit himself to our jurisdiction would be a restriction on the present right of transfer.
I would suggest that observations might be asked for from Peking; and in the meantime I should like a copy of this Minute to send to Sir H. de Sausmarez.
C. J. B. H.
Foreign Office, December 22, 1908.
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