The Secretary of State to President Wilson

My Dear Mr. President: Referring to the confidential memorandum left by the Japanese Ambassador on the morning of April 30th,23 a copy of which I gave you at the Cabinet meeting, I beg to call your attention to the changes which have been made and to submit comments thereon.

I do not see that we have any substantial reason for objecting to the claim which Japan makes, that Japanese subjects should be permitted to buy land in South Manchuria; and the same as to paragraph “b” in regard to travel, residence, and the carrying on of business there.

Paragraph “c” raises two questions:—You will notice that the Japanese are to produce passports to the Chinese local authorities, and to observe China’s police laws—”or regulations approved by the Japanese consuls” and they are to pay to Chinese authorities “taxes approved by the Japanese consuls.”

I called the Ambassador’s attention to the fact that the two clauses which I have placed in quotation marks are susceptible of abuse. To say that the Japanese shall not obey police laws unless those laws are approved by Japanese consuls is to take away from China the right to make laws controlling Japanese residents, and to say that Japanese need not pay taxes except as approved by the Japanese consuls is to say that in the sovereign matter of taxation the Japanese shall be subject to Japanese orders. If the Japanese desire to protect themselves against unfair legislation they might ask that Chinese police laws be not more severe against Japanese than against Chinese; or that the Chinese police laws shall not be [Page 419] more severe than the police laws enacted by the Japanese for the control of foreigners residing in Japan. Japan has a right to object to discrimination as between Chinese and Japanese, and in view of the unusual punishment that may be employed in China, she might even justify a demand that her citizens be not subject to more severe laws than those prescribed by Japan herself under the same circumstances; but to say that the regulations must be approved by the Japanese consuls transfers the right of making laws to Japan, acting through her consuls, and may result in serious discriminations in favor of Japanese, which could not fail to create trouble in China.

In regard to taxation, it seems to me it would be sufficient to provide that Japanese should not be subject to greater taxation than Chinese. I suggested this to Chinda and he expressed a fear that China might institute special taxes, applicable only to the business in which Japanese are engaged; but this might be prevented by a provision that the taxes levied on industries in which Japanese are engaged should not be greater than taxes levied upon the same industries elsewhere.

In other words—what Japan has a right to ask is that there shall be no discrimination against Japanese, but not that exceptional rules shall be made in favor of her people as compared with the rules governing Chinese.

The long paragraph following gives, as I understand it, the rule in such cases, and the final clause of the paragraph indicates an intention to leave Japanese to the Chinese courts as soon as the Chinese judicial reforms are brought about.

I do not see that we need to refer to Section 3, in regard to Eastern Inner Mongolia.

Section 4 related to the Han-yeh-p’ing Company. I think it might be well to express gratification that that demand has been so modified as not to include an option on, or refusal of, mines in the “neighbor-hood.” They drop that out of consideration for our suggestion. The demand as it now stands is very much softened. Paragraph “a” stipulates that China shall approve an agreement that may be concluded in the future between the Company and the Japanese capitalists. This leaves the matter to the Company and the capitalists. China can avoid the joint undertaking if the Chinese stockholders in the Company fail to conclude an agreement with the capitalists of Japan for the joint holding of the mines.

The provision “b”, not to confiscate is, in my opinion, unobjectionable, but to insist that (c) China shall not nationalize the mines “without the consent of the interested Japanese capitalists”—is to deny to China the right of eminent domain, which is essential to sovereignty. Every nation, every state and every municipality ought [Page 420] to have the right of eminent domain, and so far as I know, they have that right conditioned, of course, upon the payment of damages—no property being taken for public use without just compensation. I do not think that China ought to surrender the right to appropriate any property or industry within her domain upon the payment of just compensation to the owners.

Paragraph “d” is unnecessary. If this Company is a joint organization nothing can be done without the consent of both the Chinese and Japanese stockholders, and, therefore, it is unnecessary to say that no loan shall be permitted from any other than Japanese. If China permits the organization of the Company she ought not to prohibit the Company from borrowing from other than Japanese because that would permit the Japanese creditors to close out the Chinese holders at any time.

Section 6 deals with the provisions of former Article V, which covered the “requests”. It seems to me that the language of these new requests which are to be “kept on record” is unfortunate. Take “a”, for instance: It reads—“That the Chinese Government will, in case of necessity in the future, employ Japanese advisors.” This might be construed to mean that China engages not to employ any advisors in the future except Japanese advisors, in case advisors are necessary. The Ambassador says that this was not the intention, but in view of the feeling over there it is not well to have any ambiguous language employed.

Our suggestion on that point is the only fair basis, it seems to me, namely: that China will not discriminate against Japan in the matter of advisors.

I do not see any objection to paragraph “b”, provided it is understood that the land leased or purchased for school buildings and hospitals shall not be used for any other purpose—that is, that they shall not be used for commercial or military purposes.

Paragraph “c” is very ambiguous and is quite sure to result in further irritation. Our suggestion here, too, seems to be the only rational basis of agreement—namely, that China shall not discriminate against Japan in the matter of purchase of arms.

The request for the establishment of an arsenal in China under Japanese and Chinese management is naturally offensive to China, and if she agreed to send military officers to Japan for that purpose, it would be difficult for the military officers to refuse to make the arrangement when they reached Japan.

The request for railways in south China, contained in paragraph “d”, relates to lines about which Great Britain has been consulting, and Japan asks that she be granted these if no objection is made by other powers—evidently relying upon her ability to secure the consent of Great Britain.

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In view of the fact that all railroad lines at once demand a sphere of influence, and in view of the danger that these spheres of influence will, if continued to be granted, ultimately deprive China of her own country, I am inclined to think we ought to advise China to build her own railroads with money borrowed by general loans and not by the mortgage of particular property. I think our capitalists will loan on China’s credit and if our capitalists will loan on this security other capitalists will be compelled to loan on the same terms. This will make China’s loans national, like the loans of other governments, and relieve her of the danger which follows in the wake of these concessions.

Paragraph “e”, in regard to the freedom of preaching, is left for future discussion—that would seem to be the most easily granted of all the requests.

You will notice that the original proposal for joint administration of police is withdrawn, but I can understand why the Chinese would object more to the privilege which Japan asks for her subjects in Manchuria and Mongolia than she did to the demand for joint police supervision.

The provision as to Fukien is in line with our suggestion if the word “other” is left out, so that China will not grant the right to build shipyard, coaling or other naval or military establishment on the coast of Fukien to any Government. The last part of that clause, however, would seem to bind the Chinese Government not to allow any such establishment to be built with any foreign capital. It seems to me that it would be sufficient to provide that China should not give any agreement or pledge upon any harbor, coaling station, or naval base to any other foreign government.

You will notice that Japan makes no reference to the development of the interior of Fukien. This is in line with our suggestions.

The return of Kiaochou to China is, I think, a valuable concession and I do not see that there is any objection to the conditions—first, as to the opening of Tsingtao as a commercial port; and second, to the establishment of a Japanese concession—(that is a place for Japanese settlement)—in the locality to be designated by Japan. I suggested to the Ambassador that this, of course, did not mean that Japan would select the port, and he said, of course not. If the space selected is not too large and is intended for commercial use and residence, like the foreign settlement at Shanghai and the foreign settlement contemplated in these last proposals, I do not see any objection.

Taking the document as a whole, and considering the concessions which Japan has made, I think we are justified in believing that she will modify such of the demands as are still unreasonable, and that we ought to so change the letter that we wrote as to call attention to these points.

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The Ambassador was very earnest in his expressions of fear that our reference to the use of the soldiers would be embarrassing, because his Government could not, at this time, withdraw the soldiers lest it might seem an act of weakness, and he evidently did not like to have us make a request which they would have to refuse. I believe that this new statement gives us ground enough for a strong letter and it would seem desirable to make it as soon as possible.

I would like your opinion on the points to which I have called attention, and the impressions which you have received from reading this latest statement from the Japanese.

With assurances [etc.]

W. J. Bryan