File No. 893.773/22.

Consul Pontius to the Secretary of State.

No. 35.]

Sir: For the information of the Department, I have the honor to enclose herewith copy of my No. 28, of even date, reporting to the Legation at Peking concerning new developments which have occurred in connection with the reduction instituted by the South Manchuria Railway covering specific through shipments from Japan over its railways to interior points in Manchuria.

I have [etc.]

Albert W. Pontius.

Consul Pontius to Chargé MacMurray.

No. 28.]

Sir: Referring to my No. 21, dated July 21, 1914,1 reporting concerning the reduction instituted by the South Manchuria Railway covering specific through shipments from Japan over its railways to interior points in Manchuria, I have the honor to transmit herewith information regarding new developments which have occurred in this regard.

The protests of the Japanese merchants in Dairen and Newchwang concerning the discrimination accorded import cargo from Japan other than that shipped via the Korea-Antung railway route, was productive of beneficial result so far as they were concerned. Early in August last it was unofficially announced that the Japanese Government had in mind the introduction of a new scheme to replace the existing reduced rates arrangement before the end of the present year, and that the new system would be found satisfactory by both the Japanese and foreign merchants in South Manchuria. The new system as now instituted seemingly constitutes as much as ever a discrimination against the port of Newchwang and its foreign merchants who are still precluded from enjoying the reduced railway rates on foreign importations from Shanghai by the regular steamship lines.

[Page 599]

In the official gazette of the South Manchuria Railway, issue of the 4th ultimo, a new schedule of rates covering specific through imports from Japan via Newchwang was published. The figures agree in the main with the reduction applied to goods shipped via Antung or Dairen, but as none of the foreign merchants in Newchwang purchase their wares in Japan the reduction in the rates was of no benefit to them. The proposed introduction of a 15% reduction in rates for specific goods from Japan for transportation from Newchwang to interior points was also sanctioned, and it is now announced that the new rates will be effective from the 1st instant.

In the issue of the 30th ultimo of the Manchuria Daily News of Dairen, a semi-official organ fostered by the South Manchuria Railway, the announcement is made that the 30% reduction extended to through shipments of imports via the ports of Antung, Dairen and Newchwang has been made applicable also to through import shipments by the Nippon Yusen Kaisha steamers from Tientsin, Bombay, the United States, Australia and Europe. The Dairen merchants are to benefit also in the additional inclusion of the steamers of the South Manchuria Railway Dairen-Shanghai run in the above category.

The so-called impartial system of reduced rates which the Tokyo Government Railways Board recently intimated would be uniformly extended to the Japanese and foreign merchants in South Manchuria, is now apparently revealed as a discrimination in favor of Japanese shipping. While it is true that the Newchwang foreign merchant may avail himself of the 30% reduction by importing his cotton goods from the United States or Europe in Japanese steamers, still there is little likelihood under existing circumstances of his doing so. Shanghai will always be considered the entrepôt of foreign importations to China, at least so far as the local foreign and most of the Chinese merchants are concerned, and until the existing railway-rate reduction as now instituted includes foreign imports, however or from wherever shipped, the action of the Japanese Government in the present instance must be considered as a distinct departure from the equal opportunity principle so clearly expressed by it as regards Manchuria.

The complaint of the foreign chambers of commerce at Shanghai, Dairen and Newchwang in this connection was originally based on the fear that the preferential rates would be extended solely to goods of Japanese manufacture, and it remains to be seen with what attitude these commercial bodies will view the present system now apparently in force.

I have [etc.]

Albert W. Pontius.
  1. Not printed.