Papers Relating to the Foreign Relations of the United States, With the Annual Message of the President Transmitted to Congress December 6, 1910

File No. 5315/895.

Ambassador Reid to the Secretary of State.

American Embassy,
London , April 5, 1910 .

No. 1233.]

Sir: With reference to your instruction No. 1255, of the 22d ultimo, on the subject of the Hukuang loan, I have the honer to inclose herewith copy of my note to the foreign office dated April 2, in which I again review the position of the United States, laying emphasis on the fact that the Hankow-Canton line, being an integral part of the Hukuang agreement, should therefore be considered in connection with the equal division of engineering rights among the interested powers.

I have, etc.,

Whitelaw Reid.

[Inclosure.]

Ambassador Reid to the Minister for Foreign Affairs.

American Embassy,
London , April 2, 1910 .

Sir: My Government has been awaiting with great interest the result of the agreement between the British and French financial groups on the division of interests in the Hankow-Canton and Hankow-Szechuen Railways, of which you were good enough to advise me in our conversation of March 15. So far we can only learn that the agreement has not received the prompt sanction of the French Government which was then expected, for the apparent reason that it is thought to violate the equality between the groups representing the four nations for which you and they as well as we have been seeking.

While this unexpected delay is thus prolonged, and the negotiations regarding this equal division, which have now been in progress for 10 months, since June 3, 1909, still bring forth nothing, I venture, with the authority of my Government, to ask attention to what may be the cause of their sterility. Is it not possible that it results from a fundamental difference in what is really meant by the equality at which we all say we are aiming? Does not Great Britain mean equality in engineering rights on the Hankow-Canton line exclusively for herself? And do not the other powers regard the Hankow-Canton line as an integral part of the Hukuang loan arrangement, and therefore to be considered in the equal division of engineering rights?

Now, the original right of the united States was incontestably to one-half interest in the whole Hankow-Szechuen line, including extensions. On the suggestion of other parties interested we accepted as a virtual equivalent a quarter interest in the combined lines covered by the Hukuang agreement, the Canton-Hankow line and the Hupeh section of the Hankow-Szechuen line. Because we were late in the field, we waived our rights as to chief engineers, but reserved them on further extensions. We thus became entitled to 800 kilometers, whether you consider our original half of the Szechuen lines or our fourth in the combined lines. To facilitate agreement, we accepted sub engineering rights on 200 kilometers from Germany, and made a further concession of 100 kilometers to France, leaving ourselves chief engineering rights on only 500 kilometers;

Now, as my Government understands the effect of the British proposal, it would leave us still less, only 400 kilometers with chief engineering rights, against 1,500 for Great Britain. We quite fail to see why the Canton-Hankow line should be an integral part of the Hukuang agreement for the loan and materials but not for engineering rights. We gladly assent to the principle of equal division, but we can not consider that division equal.

I have, etc.,

Whitelaw Reid.