File No. 5315/713.

The Secretary of State to Chargé Phillips.

[Telegram—Paraphrase.]

Mr. Knox informs Mr. Phillips that this Government is disposed, in the interest of an immediate and friendly settlement, to concede to France the whole of the 100 additional kilometers of engineering rights on the Szechuen extension on condition that Great Britain satisfies the French demand as to subengineers, provided American equal rights as to purchase of materials on both lines are fully guaranteed; and, further, that the existing arrangements with Germany be not disturbed.

Mr. Knox adds that Mr. Phillips may informally cooperate with the American group along this line and inform the department of the result.