File No. 5315/338.
The Acting Secretary of State to Ambassador Reid.1
Washington, July 9, 1909.
Mr. Wilson informs Mr. Reid that the New York representatives of the American group on July 7 communicated to the department a preliminary basis of American participation which their London representatives seemed not indisposed to discuss with the British, French, and the German groups.
Says this basis seemed to look to American participation to the extent of 20 per cent only, and that it apparently anticipated also equal footing as to all foreign materials and as to banking advantages, which last, however, would naturally be in proportion to the amount of capital supplied by each group.
Informs him that the Government of the United States will on no account accept less than equal participation as heretofore indicated, and that its protest at Peking will not be withdrawn until such arrangement is made, submitted to, and approved by the Department of State. Points out that the Chinese Government has assured the United States that “the loan will not be concluded unless the bankers (European groups) settle with the American group” and has so notified the European groups, and that the British, French, and the German Governments have assured the United States that they are favorable in principle to American participation. Says the principle involved is that of equal opportunity, and that it is inconceivable that the European groups would wish to sacrifice principle to a quibble as to a slight pro rata difference involved, for by doing so it is obvious that they would jeopardize the whole railway loan.
States that the text of China’s promise does not directly concern the bankers, and that this Government has precisely explained its demands thereunder. Points out that the pledge of China and its interpretation are official matters concerning only the Governments of the United States and of China, and that these Governments have no differences on the subject.
[Page 170]Gives for the information of the embassy the following account of the official engagement in question:
“The American minister at Peking, in a note dated August 12, 1903, called the attention of the Wai-wu Pu to a statement published in the London Times to the effect that British companies had applied to Chinese Government for a concession to build a railway from Sinyang, Hunan, to Ch’eng-tu, Szechuen, and the Chinese Government had replied that the line would be built by Chinese, and British had replied that if foreign funds were needed British should have preference. American minister reminded Wai-wu Pu that Americans had long ago applied for a similar concession, and that some months ago he had, in a personal interview, called the attention of the foreign office to this fact and had asked that if foreign capital were needed application should first be made to Americans, as they were first in the field. He concluded by stating in the note, ‘I must enter my formal protest against any arrangement with others which may deprive my countrymen of their just claim to consideration in this connection.’ Under date of August 15, 1903, the foreign office replied to Mr. Conger’s note in regard to the American right to finance Hankow-Szechuen Railway that China intended to build this railway herself, but if in the future foreign capital was needed, since British and American companies had successively applied for concessions to build the road, application would be made to British and American companies.” The note states that the British legation was notified to the same effect, and concludes by stating:
In short, when companies of various nationalities apply to China for railway concessions it must always remain with China to decide the matter. It is not possible to regard an application not granted as conferring any rights or as being proof that thereafter application must first be made to the persons concerned.
The matter was again twice brought up in 1904. In July, 1904, Mr. Conger forwarded the application of the China Investment & Construction Co. to finance this line, and foreign office on July 18 reiterated China’s intention to build the line herself and added that if foreign funds were necessary the matter “will be dealt with as proposed in the note of August 15, 1903, and companies composed of Englishmen and Americans will be consulted.” And again, on July 21, Mr. Conger, referring to a report that the French were negotiating for a loan for the construction of this line, reminded Prince Ching that “last year and again recently, he, Ching, had given him, Conger, a definite promise that if a loan should be made for the construction of the line mentioned the first application would be made to American and British capitalists.”
“The foreign office in reply simply quoted legation’s dispatch and denied the report referred to.”
Says that it will be observed by these positive and unequivocal assurances that China pledged to the United States a one-half share in the whole Hankow-Szechuen line, including extension to Ch’eng-tu (not merely the line to Ichang, the Hupeh section), and that the right thus assured in the whole railway system then contemplated is vastly more than equivalent to 25 per cent of all that is definitely involved in the present tentative agreement of the European bankers. Points out that this tentative agreement after all, in the absence of the final edict and ratification by China, amounts to little more than an application, which, as the Chinese Government has itself stated, confers [Page 171] no rights. Indicates that China’s only complete obligations in this matter are that to the United States and that under whatever assurances Great Britain acquired about the same time.
Mr. Wilson concludes by saying that this Government will not recede from its position; that if the banking syndicate which undertook to sustain the American policy of equal participation ignore the national aspect of the transaction, or fail to cooperate in the broad purpose in view, the Government will seek other instrumentalities to secure proper American recognition; that it should be clearly understood that this Government is interested purely for broad national reasons; that the Government alone has any rights in this matter; and that it holds such rights in trust for the good of general American interests in China.
Directs that the foregoing be explained to the American group’s representatives, who, it is understood, will now hold a second conference at Paris with the European groups.
- Same to Berlin and Paria.↩