Chargé Schuyler to the Secretary of State.

No. 600.]

Sir: Referring to your telegrams of November 6 and December 14, concerning the project for the complete neutralization of the [Page 239] railways of Manchuria, I have the honor to inform you that in compliance with the instructions in the latter telegram I handed to the minister for foreign affairs, Mr. Iswolsky, a formal note, with accompanying aide-mémoire, embodying the views of the Department of State as set forth in the telegram of November 6, regarding the neutralization project. Copies of the note and aide-mémoire are inclosed herewith for your information. Mr. Iswolsky read over the aide-mémoire very carefully in my presence and then remarked that he was a little disappointed that the whole matter had not been, worked out in detail, but that he would give the project his careful consideration.

I have, etc.,

Montgomery Schuyler.
[Inclosure.]

Chargé Schuyler to the Minister for Foreign Affairs.

Your Excellency: With reference to the informal conversation which Mr. Rock-hill had with your excellency on October 31–November 13, in the course of which he presented certain suggestions concerning the railways of Manchuria, I now have the honor to inform your excellency that these suggestions have been the subject of correspondence between this embassy and the Department of State, as the result of which I am instructed to present for the consideration of the Imperial Government an aide-mémoire embodying the views of the Government of the United States in this matter.

I take this occasion, etc.,

Montgomery Schuyler.
[Subinclosure.]

aide-mémoire.

All the powers having interests in the three Manchurian Provinces of China having repeatedly, during the last 10 years, given categorical assurances of their determination to support the maintenance of the sovereignty and integrity of the Chinese Empire and the principle of equality of commercial opportunity, it seems to the United States Government that nothing would now place this policy on so firm and lasting a basis in Manchuria as its application to the railroads existing at present or to be built in the future by completely neutralizing them to the purposes of commerce and industry. Such a consummation could, it would seem, best be attained by the adoption of some plan which would vest in China the ownership of all the railroads built or hereafter to be built in Manchuria, and by placing them under the guaranty and supervision of the powers participating in the undertaking. The carrying out of such a scheme would require that a loan should be made to China for the purchase of existing lines and the construction of new ones. The period of currency of the loan should be ample to make it reasonably 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 powers participating should have, during the time of the loan, supervisory power over the railroad system and their nationals should enjoy on an equitable pro rata basis agreed upon among the powers, and during the same period, the usual preferential rights for themselves and their railroad manufactures. One of the obvious advantages of the plan suggested would be that those among the powers that have separately undertaken duties, responsibilities, and expenses for the building and maintenance in Manchuria of railways and for the protection therein of their commercial and other interests would be able to shift a large part of them onto the other powers participating in the scheme, who would, in conjunction with themselves, share them in proportion to their respective interest in the neutralized system. It is belived that by the adoption of some such neutralized system of railways in Manchuria, under an economic, scientific, and impartial administration, foreign as well as Chinese trade and industry would be greatly promoted, and furthermore [Page 240] that it would create such a community of interests among the powers as would facilitate cooperation in and successful solution of the problems of fiscal and monetary-reforms now engaging the attention of the Imperial Chinese Government and of the treaty powers.