I received your Telegram No. SC.6  but I am afraid there has been some misunderstanding which must have occurred through the inadequacy of our telegrams in explaining the matter to you. In the circumstances, I considered it proper to send you my Telegram No. S.32 of the 28th February.  It is clearly the duty of a diplomat, if he believes that an instruction is given on a misunderstanding of the facts, to clear up this misunderstanding before proceeding.
I do not know whether the file you are using contains the Note attached to the Chinese Draft Treaty (see my Telegram No. S.16 ). If you look at it you will see that the Chinese ask His Majesty the King for the Commonwealth of Australia to renounce all rights and privileges relinquished by His Majesty the King for the United Kingdom and Ireland in the British Exchange of Notes. This clearly indicated that the Chinese wanted not only a renunciation of Consular jurisdiction and territorial concessions but all other privileges included in the 'Unequal Treaties'.
In my opinion, the drafting of this in a general form by reference to the British Note was objectionable and I therefore drew up a draft which I sent you in my Telegram No. S. 26.  This was merely an extension of the Chinese drafting. Your Telegram No.
SC.4  contained no instructions on this. You ask why we should sign any Note seeing that these things do not concern us, but the answer is that they are considered by the Chinese as matters of extraterritoriality and the treaties which secured them, all the 'Unequal Treaties'. They ate privileges exacted by treaty by the foreign Powers which the Chinese wish surrendered. We are, as Dr.
T. V. Soong  specifically said, (see my Despatch No. 63 of the 20th January ) considered heirs of these treaties as successor members of the British Commonwealth. They consider that when we promised the removal of extraterritoriality, we promised to renounce these treaties. Failure to do so when asked will look as if we wanted to retain the privileges. At any rate, it will be regarded as a definitely unfriendly act. It seems to me so pointless to incur this feeling as the privileges are of no value to us.
You appear to have been misled by the attachment of certain provisos and conditions to some of the renunciations. These were in the British Note and I copied them in the Draft because they were in our favour. I dare say this was confusing but as you have placed on me the difficult task of drafting in this remote spot where I cannot receive instructions in detail, I have adopted the practice of including all points in our favour, leaving you to strike them out if you so desire. If you look at my Telegram No.
S.26 you will find I invited you to do this.
The various stipulations made by the British can all be omitted and the Note would then consist of a simple series of renunciations, that is:
(1) Treaty rights relating to Treaty Ports.
(2) Special Courts in Shanghai and Amoy.
(3) Foreign Pilots.
(4) Entry of naval vessels.
(5) Right to appoint Inspector-General of Customs.
(6) Special rights of British shipping.
The need for Clause (f) depends on whether there are any Australians with cases pending which I have no means of deciding.
It is probably unimportant but would be important if there were any cases pending. Clause (h) is the sort of clause which the Chinese like and I cannot see that it could possibly do any harm.
What I am afraid of is that the Chinese will not be able to understand our unwillingness to renounce these privileges and will attribute it to a sinister intention. The fact that they are useless to us will increase their amazement. The Chinese are a dreadfully suspicious people.
On the omission of Articles V, VI and VII we have a good case.
When I see the Vice-Minister for Foreign Affairs , I shall put our refusal of these Articles on the ground that you refuse to go beyond extraterritoriality and that all questions of reciprocity are matters for detailed negotiation when the whole situation has been fully reviewed. I think we shall get away with this, especially as I notice that the Chinese have not put in a counter- draft to the Canadian Treaty which indicates, I consider, that they are waiting until they see how they get on with us.
I presume you noticed that the amended Article V is much less objectionable (see my Telegram No. S.28 ). The situation, I take it, is that the Chinese will give to Australians in China rights to travel, reside and carry on business similar to those given by Australians to Chinese in Australia. In other words, if we have restricted Chinese, they can restrict Australians in similar ways. The wording would probably have to be altered to make this clear.
There is no doubt that failure to sign the amended Article V in a form in which it was signed by Britain and America will cause some misunderstanding and suspicion, and possibly resentment. It may do more than this-it may give the impression that we are afraid of the issue.
My view is that we cannot afford to show this fear. We have one vital issue-the question of immigration-on which we must be firm and reasonable. This may cause a good deal of ill-feeling which we must face and handle when it arises. I am prepared to stand up to this and have no doubt that with firmness, intelligence and patience, it can be negotiated safely, especially as there are others in the same position as ourselves.
What I am trying to avoid is the complication of the situation by suspicion and misunderstanding on points of no importance. We are at present on good terms with the Chinese because there is a recognition of common interests in the Pacific but Chinese opinion is completely unreliable and could be switched against us by a week's propaganda in the newspapers. When the movement is once started, the damage may take years to rectify. My main objective is to avoid giving any unnecessary pretext for this to occur.
F. W. EGGLESTON