File No. 893.773/30.

Minister Reinsch to the Secretary of State .

No. 423.]

Sir: In connection with the Department’s instruction No. 140 of July 30 last, with respect to freight rates on the South Manchuria Railway, I have the honor to refer to the further correspondence of the American Consul at Newchwang—despatches Nos. 28 and 31, of October 3 and 17 respectively—copies of which he has forwarded to the Department; to a report1 on freight rate reductions on the South Manchuria Railway submitted by Mr. G. F. Bickford, Vice Consul in Charge at Antung, on August 3, and to his letter1 of August 20 to W. A. Reed, Esquire, Honorary Secretary of the American Association of China, at Shanghai, copies of which are enclosed; to the despatch1 No. 189 of the Consulate-General at Shanghai, dated August 6, copies of which were sent to the Department; and to four unnumbered despatches of the American Consul at Dalny, addressed to the Department of State, dated October 9 and 10, of which extra copies are enclosed for ready reference.

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I would also refer to the memorandum of the British Ambassador at Tokyo to the American Ambassador there, dated September 28, transmitted to the Department with the Embassy’s unnumbered despatch of October 8. With respect to the latter memorandum, it is to be pointed out that the statement of Baron Kato, of July 20, does not contain the assurance that through goods brought to Manchuria in non-Japanese bottoms will receive equal treatment with those brought by the ships on the Osaka Shosen Kaisha and the Nippon Yusen Kaisha. In fact it appears to promise nothing further than that goods may receive equal treatment though shipped from abroad instead of from Japan, leaving untouched the arrangement that such equal treatment is confined to goods imported in Japanese bottoms.

The question with respect to the freight rates on the South Manchuria Railway has two aspects; the arrangement of the rate so as to favor the ports of Antung and Dairen, as over against the port of Newchwang, and the special reduction of thirty per cent (30%) granted to goods imported in Japanese bottoms. The reports of the Consulate at Newchwang deal more especially with the former, those from Dairen with the latter aspect of the matter.

The chief objection to the freight tariff, as between the port of Dairen and the port of Newchwang, lies in the fact that the latter is not given the advantage in rates which its shorter distance from Mukden and other stations on the South Manchuria Railway would seem to call for; thus the rate quoted from Newchwang to Tiehling, 156 miles, is the same as that quoted from Dairen to Tiehling, a distance of 293 miles. In other words, while the rates from Newchwang are placed on a per-mile basis, those from Dairen are specific. This method of rate-making, while it is not prima facie discriminatory against foreign merchants, does as a matter of fact discriminate against a port in which the interests of foreign (European and American) merchants are relatively more important than those in Dairen.

A far more serious situation is presented by the reduction of thirty per cent (30%) which, under notice of the South Manchuria Railway, has been extended to merchandise imported in vessels of the Japanese lines plying to Newchwang and Dairen. To this there must be added the special transshipment charges provided for by railway notice of September 3 for cargo brought in by the Japanese steamship lines. In the light of these railway notices it would appear that the equality of treatment to which foreign goods are entitled upon entering into Manchuria is being interpreted by the Japanese authorities as confined to goods carried in Japanese bottoms.

From the point of view of American trade in North China and of the most essential policy for which the United States stands in the Far East, it would seem to be of the greatest importance that a definite assurance should be obtained from the Japanese Government that equality of treatment is not to be thus limited, to the great disadvantage of American shipping and incidentally of American commerce itself. Not only is the levying of freight charges openly discriminatory against merchandise not imported in Japanese bottoms, in direct violation of one of the specific principles enunciated by the American Government in 1899 as a part of the “open door” policy, [Page 605] to which the formal adherence of Japan has been repeatedly given; but it is, moreover, in contravention of Article VIII of the Treaty of Commerce and Navigation between the United States and Japan of February 21, 1911, whereby:

All articles which are or may be legally imported into the ports of either high contracting party from foreign countries in national vessels may likewise be imported into those ports in vessels of the other contracting party, without being liable to any other or higher duties or charges of whatever denomination than if such articles were imported in national vessels. * * *

I have [etc.]

Paul S. Reinsch.
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