CO129-470 - Public Offices - 1921 — Page 640

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CONFIDENTIAL. --Released for MORNING PAPERS, SATURDAY, APRIL 21, 1921.

DEPARTMENT OF COMMERCE

Tashington

HUGHES AND HOOVER ENDORSE CHINA TRADE ACT.

The China Trade Act, a bill designed to place American business in China on an even competitive basis with the business of Great Britain, France, and Japan, has the approval of Secretary of State Hughes and Secretary of Commerce Poover it was learned to-day when Congressman yer of Missouri, sponsor of the Teasure in the House, made public letters of endorsement written by the two Cabinet officers. The letter from the Secretary of State, which was dated April 12, reads as follows:

"I have the honor to acknowledge the receipt of your letter of March 9, 1921, in which you request my views regarding the bill (H. R. 16047), to authorize the formation of corporations to promote trade in China, which passed the House of Representatives on February 21 last.

"I beg to state that the Department has for some time advocated the enact- ment of Federal legislation which would regularize the formation of corporations in China, and is in sympathy with the general provisions of your bill.'

The letter from Secretary Hoover, which is dated April 14 and was addressed

to Chairman Volstead, of the House Judiciary Committee, reads as follows:

"I wish to add strong emphasis to the desirability of early consideration

of House B11 16043 to authorize the incorporation of companies to promote trade

in China, which was introduced by Mr. Dyer and passed the House at the last Session but failed to reach the floor of the Senate.

"The matter is one of great importance to the preservation of the trade and investment of our nationals in China, The Act is intended to establish a Federal Incorporation law for local China business in such a manner as to give our citizens an equality of opportunity with other nationals."

The letter of the Secretary of Commerce goes to considerable length in explaining the necessities of the measure and also recounts how before the Euro- cean war, American merchants in China were forced because of the inadequacy of our laws to incorporate their companies under British law, wider a regulation

nown as the British Incorporation Law of Pongkong. In 1918, the British author- ities, acting entirely within their rights, so amended their charter under an order in Council which required a majority of the directors and the effective xecutives of these British companies to be British subjects. In consequence of this action a number of American enterprises in China established and conducted by Americans in conjunction with Chinese, have gone over to British control. Americans have lost their positions and the control of business created and owned by themselves, and our citizens have lost the trade in supplies and machinery that Flows in consequence of the establishment of such businesses.