Ambassador Reid to the Secretary of State.

No. 1089.]

Sir: I have the honor to transmit herewith the full text of a reply received this evening from Sir Edward Grey to my note communicating the memorandum contained in your telegram of November 6, 1 p. m. The substance of it is cabled you simultaneously in my November 26, 6 p. m.1

I have, etc.,

Whitelaw Reid.
[Inclosure.]

The Minister of Foreign Affairs to Ambassador Reid.

Your Excellency: I have the honor to acknowledge the receipt of your excellency’s note of the 9th instant, making certain proposals with a view to preserving the undisturbed enjoyment by China of all political rights in Manchuria and to promoting the development of the Province under a practical application of the policy of the open door and equal commercial opportunity. The first of the proposals made by your excellency is to the effect that the Manchurian highways and the railroad should be brought under an economic and scientific and impartial administration by some plan vesting in China the ownership of the railroads through funds furnished for the purpose by the interested powers willing to participate, and you add that the execution of such a plan would require the cooperation of China and of Japan and Russia, as well as of the United States and Great Britain, whose special interests rest upon the existing contract relative to the Chinchow-Aigun Railroad. Your excellency goes on to say that should the above suggestion not be found feasible in its entirety, the desired end would be approximated, if not attained, by Great Britain and the United States diplomatically supporting the Chinchow-Aigun arrangement and inviting interested powers, friendly to the complete commercial neutrality of 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 general principle involved in the first of your excellency’s two suggestions entirely commends itself to His Majesty’s Government, so far as the preservation of the open-door policy and equal commercial opportunity are concerned, and would in their opinion be well adapted to securing to China full control in Manchuria. I am, however, of opinion, that until the pending negotiations for the Hukuang loan have been completed, it would seem undesirable to consider the question of another international loan for China’s railway undertakings, and I would suggest, therefore, that, for the present at any rate, it would be wiser to postpone consideration of the first scheme. As regards the alternative proposal contained in your excellency’s note, I observe with satisfaction that the cooperation of interested powers forms part [Page 236] of the scheme, and I have the honor to suggest, for your excellency’s consideration, that as a preliminary step toward attaining this desirable end the two Governments should unite in endeavoring to persuade the Chinese Government to admit the Japanese to participation in the Chinchow-Aigun line, as being the parties most interested. The question of supplying funds for the purchase by China of existing lines to be connected with the Chinchow-Aigun line could be considered subsequently.

I have, etc.,

E. Grey.
  1. Not printed.