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Mr. Hoover explains that the object of the act is to offer a form of American corporation law that would rank with the British Law in its protection to stockholders and would give American business in China a prestige which it does not now possess. The proposed ect also provides freedom from U. S. taxes to such corporations upon such part of their business as is wholly conducted in China and outside of the United States. This will enable Chinese business men to make investments in American companies and cooperate with Americans in the industrial development of China which is proceeding rapidly and which is already making demands upon our manufacturing and engineering industries. The letter ends with the following significant paragraph:
"I wish again to emphasize the urgent importance of the matter. Our trade in China is to a large degree dependent upon the upbuilding and control by Americans, working jointly with Chinese of manufacturing, public utilities and other enterprises. At the present time our people are placed at a great dis- advantage, and are rapidly losing positions created over years. T
The China Trade Act was originally introduced in Congress more than two years ago upon the recommendation of the American Chambers of Commerce of China. These organizations of American business men in China have been developed since the beginning of the war and have become important factors in the rapid growth of American business in the young Chinese republic. Although American trade in China enjoyed great prosperity during the war when other markets were closed, it soon became evident that we could not hold our advantage unless we modernized our incorporation machinery in accordance with the actions of our chief competitors who long ago realized the importance of this trade field. At the present time American business in China is subject to the conflicting regulations of the various state and territorial laws, none of which are adapted to foreign trade promotion. The laxness of some of the state regulations governing the organizatio of companies has layed us open to much criticism in the Orient through the promotion of not a few questionable enterprises which have preyed upon the natural friendliness of Chinese business men for American institutions. At the present
time it is even possible for non-Americans to incorporate companies in this country and operate in China as American state companies although there may not be a dollar of American capital or a single American individual connected with the enterprise.
It is to remedy this situation and at the same time provide equality of opportunity for our citizens that the present bill is designed.
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