File No. 893.773/23.

The Acting Secretary of State to Ambassador Guthrie .

No. 76.]

Sir: Your unnumbered despatch of October 8, 1914 and its enclosure, a copy of a memorandum handed to you by the British Ambassador at Tokyo and relating to the subject of apparent discrimination against shipments from Shanghai in the freight rates of the South Manchuria Railway, have been read with interest.

According to this memorandum the British Ambassador was promised by the Japanese Minister for Foreign Affairs that—

hereafter in the case of goods from foreign countries, where application is made for through transport, the place of destination of the goods being given as Mukden or certain specified stations north of Mukden, there will be no objection to such goods being accorded the same treatment, as regards freight over the lines of the South Manchuria Railway, as goods coming from Japan.

The Department will be glad to be informed whether or not the words “foreign countries” used in the memorandum are meant to include China, which is “foreign” as regards Japan, but not as regards Manchuria. If China is included, then the Department presumes that goods belonging to Americans shipped from Shanghai into Manchuria may under the conditions specified obtain the same freight rates over the South Manchuria Railway as goods from Japan.

The context appears to show that China is not one of the foreign countries to which reference is made and that American goods to obtain the favored rates must be shipped through Japan and on steamers either of the Osaka Shoshen Kaisha or of the Nippon Yusen Kaisha. Railway Notice No. 47, however, enclosed in the unnumbered despatch of the Consul at Dalny of October 9, 1914, dealing with the extension of reduced rates on through goods system to foreign trade of Japan, declares that the Shanghai line of the Nippon Yusen Kaisha is included in the list of those whose shipments may have the reduced rate.

American goods are usually transshipped at Shanghai and if the Department’s understanding of Railway Order No. 47 be correct such goods will not suffer discrimination if forwarded to Mukden or points north of Mukden by steamers of the Nippon Yusen Kaisha.

The Department notes further that American goods shipped to points south of Mukden can not enjoy the favored rates unless they are shipped from Japan over the steamship lines mentioned.

You are instructed to consult with your British colleague and endeavor to obtain his cooperation in representing to the Japanese Minister for Foreign Affairs the injury that will be done to American and European trade in Manchuria by the restrictions imposed. You should call attention to the repeated pledges given to the United States by Japan in support of the principle of equality of commercial opportunity in China, particularly to the note of Viscount Aoki to Mr. Buck under date of December 26, 1899 which gives the assurance asked by Secretary Hay that there shall be “no higher railroad charges over lines built, controlled or operated within such ‘sphere’ on merchandise belonging to citizens or subjects of other nationalities transported through such ‘sphere’ than shall be levied [Page 607] on similar merchandise belonging to their own nationals transported over equal distances.”3

If it should be replied that American and European goods have only to comply with the conditions mentioned to receive the same rates as Japanese goods, it should be pointed out that to require shipment over one or the other of two Japanese lines and in certain cases from a Japanese port is not in accordance with the provision of the first paragraph of Secretary Hay’s note to Minister Buck, which was agreed to by Japan and insures equality of treatment within the limits of China for navigation as well as trade.

The discrimination mentioned, moreover, appears to be opposed to the understanding reached by Secretary Root and Baron Takahira in November, 1908, in an exchange of notes which declares it to be the desire of the two Governments to encourage the free development of their commerce in the Pacific Ocean and to be the policy of both Governments to support by all pacific means the principle of equal opportunity for commerce and industry of all nations in China.4

You are instructed that, failing to obtain the cooperation of your British colleague, you should bring the subject informally to the attention of the Minister for Foreign Affairs and endeavor to obtain assurance that the railway orders issued by the South Manchuria Railway Company will be so modified as to remove the discrimination against American trade to which attention has been called above.

I am [etc.]

Robert Lansing.