Memorandum by the Secretary of State of an Interview With the Chinese Minister (Koo), November 12, 1917

The Chinese Minister called upon me this afternoon and delivered a memorandum29 setting forth the views of his Government in regard to the notes exchanged with the Special Japanese Ambassador.

After reading the memorandum I said to the Minister that I fully understood the reason for his Government’s delivery of the memorandum, though as a matter of fact it was unnecessary since there was no thought by either Viscount Ishii or me to bind China in any way for we did not possess the power or have the intention to do so. I explained to him that, in order to avoid any question of China giving assent to the understanding reached in the notes, I had abstained mentioning the negotiations to him during their progress or advising his Government in any way of the subjects being discussed. I said that I did not want anyone to say that China had relinquished any right by not objecting to the understanding before its conclusion although cognizant of its negotiation. That my silence had been deliberate and because I wished to keep China from an embarrassing situation.

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I further told him that our traditional friendship for China was unchanged and that China’s interests had been in my mind throughout my intercourse with Viscount Ishii; that, while this was so, he must realize that the present war had entirely changed conditions; that in financing it we had need of all our money at home; and that in view of this drain upon our resources China did not today offer the same attractiveness for investment to American capital as it had in the past. I pointed out to him that Japan and the United States were the only two countries which had surplus capital to invest at the present time, but that we were not anxious to send our money abroad if we had to enter into competition in placing it; that the time had passed when China could play off the United States against Japan in the matter of investments for we were no longer keen to encourage sending money into other countries when we needed it so much for carrying on the war.

I said that if we dropped out the field would be left entirely in the hands of Japanese, which I presumed China would not wish; that we were anxious to prove our friendship for his country by aiding her financially, but that the only way to do so in the present circumstances was to come to some arrangement for cooperation with Japan, as competition would probably defeat any loan in this country; and I assumed that China would prefer to have us participate even under those conditions.

The Minister listened intently but made no comment. He then said that his Government was particularly disturbed over the recognition of Japan’s “special interests” in China, and asked what the phrase meant.

I replied that it was manifestly an axiom that geographical propinquity necessarily gave nations special interests in their neighbors, and that setting it forth was merely stating an axiom and nothing more.

The Minister said that he could not see, if it was an axiom, why it was stated; that it was the statement which disturbed his Government.

I replied to him that I thought he would agree with me that to concede a truth, which could not be successfully denied, in exchange for a declaration of a policy which restrained the other party was certainly a very desirable thing to do.

He asked to what I referred, and I said to the last clause of the notes in which the United States and Japan declared themselves opposed to “any government” infringing China’s independence or territorial integrity, a declaration which applied to the parties to the understanding as well as to other governments. I told him that such a bargain seemed to me decidedly in favor of China, and I [Page 453] believed that upon consideration his Government would come to the same opinion.

The Minister wished to know if the special interests applied to other neighbors such as Russia on the north, France on the south, and Great Britain on the west.

I told him that the axiom held good the world over, that we had recognized it in our relations on this continent, and that China might apply it with equal force to her neighbors.

I said that probably the Chinese Government had done wisely as a matter of precaution in sending the memorandum, but that no reservation or caveat could change the natural consequence of propinquity.

The Minister thanked me for my explanations but expressed no opinions of his own.