The Secretary of State to Ambassador Reid.1

[Telegram—Paraphrase.]

In reply to Sir Edward Grey’s inquiries reported in his telegram of October 20,2 Mr. Reid is instructed to present to the foreign office textually the following memorandum:

Now that there has been signed and ratified by an unpublished imperial decree an agreement by which the American and British interests are to cooperate in the financing and construction of the Chinchow-Tsitsihar-Aigun Railroad, the Government of the United States is prepared cordially to cooperate with His Britannic Majesty’s Government in diplomatically supporting and facilitating this enterprise, so important alike to the progress and to the commercial development of China. The Government of the United States would be disposed to favor ultimate participation to a proper extent on the part of other interested powers whose inclusion might be agreeable to China and which are known to support the principle of equality of commercial opportunity and the maintenance of the integrity of the Chinese Empire. However, before the further elaboration of the actual arrangement, the Government of the United States asks His Britannic Majesty’s Government to give their consideration to the following alternative and more comprehensive projects: First, perhaps the most effective way to preserve the undisturbed enjoyment by China of all political rights in Manchuria and to promote the development of those Provinces under a practical application of the policy of the open door and equal commercial opportunity would be to bring the Manchurian highways, the railroads, under an economic, scientific, and impartial administration by some plan vesting in China the ownership of the railroads through funds furnished for that purpose by the interested powers willing to participate. Such loan should be for a period certain that it could be met within the time fixed and should be upon such terms as would make it attractive to bankers and investors. The plan should provide that nationals of the participating powers should supervise the railroad system during the term of the loan and the governments concerned should enjoy for such period the usual preferences for their nationals and materials upon an equitable basis inter se. The execution of such a plan would naturally require the cooperation of China and of Japan and Russia, the reversionary and the concessionaries, respectively, of the existing Manchurian railroads, as well as that of Great Britain and the United States, whose special interests rest upon the existing contract relative to the Chinchow-Aigun Railroad. The advantages of such a plan to Japan and to Russia are obvious. Both those powers, desiring in good faith to protect the policy of the open door and equal opportunity in Manchuria and wishing to assure to China unimpaired sovereignty, might well be expected to welcome an opportunity to shift the separate duties, responsibilities, and expenses they have undertaken in the protection of their respective commercial and other interests, for impartial assumption by the combined powers, including themselves, in proportion to their interests. The Government of the United States has some reason to hope that such a plan might meet favorable consideration on the part of Russia and has reason to believe that American financial participation would be forthcoming. Second, should this suggestion not be found feasible in its entirety, then the desired end would be approximated, if not attained, by Great Britain and the United States diplomatically supporting the Chinchow-Aigun arrangement and inviting the interested powers friendly to complete commercial neutralization of [Page 235] Manchuria to participate in the financing and construction of that line and of such additional lines as future commercial development may demand, and at the same time to supply funds for the purchase by China of such of the existing lines as might be offered for inclusion in this system. The Government of the United States hopes that the principle involved in the foregoing suggestions may commend itself to His Britannic Majesty’s Government. That principle finds support in the additional reasons that the consummation of some such plan would avoid the irritations likely to be engendered by the uncontrolled direct negotiations of bankers with the Chinese Government, and also that it would create such a community of substantial interest in China as would facilitate a cooperation calculated to simplify the problems of fiscal and monetary reforms now receiving such earnest attention by the Imperial Chinese Government.

  1. Repeated to St. Petersburg, Paris, and Berlin for their information.
  2. See Foreign Relations, 1900, p. 207, for dispatch covering telegram.