File No. 893.773/34.

Consul Pontius to the Secretary of State .

No. 63.]

Sir: For the information of the Department, I have the honor to transmit herewith copies of correspondence of recent date had between the Embassy at Tokyo and this Consulate concerning the discrimination in through freight rates on the South Manchuria Railway.

The Department is referred to my No. 52 dated November 28, 1914, with which was transmitted a copy of the Legation despatch referred to in the correspondence.

I have [etc.]

Albert W. Pontius.
[Inclosure 1.]

Ambassador Guthrie to Consul Pontius .

Sir: With reference to recent correspondence between our offices regarding discrimination in through freight rates on the South Manchuria Railway, I beg to request that you will inform me with as little delay as possible what is the present situation. I should be glad if you would give me your opinion as to the manner in which, and the extent to which, imports of American goods from Shanghai for distribution to interior points by that road have been affected.

In your letter of November 28 last to the Legation at Peking, you say that “assuming that the through bill of lading facilities were made available to all steamship lines instead of only to Japanese lines as at present,” etc. I am uncertain whether or not this means that the 30% reduction is to be extended to goods coming from Shanghai by other lines than the Nippon Yusen Kaisha.

I am [etc.]

George W. Guthrie.
[Inclosure 2.]

Consul Pontius to Ambassador Guthrie .

Sir: I have the honor to acknowledge the receipt of an instruction from the Embassy dated December 31, 1914, asking [etc.]

Since my last report to the Legation dated November 28, 1914, copy of which the Embassy has received, I know of no further developments which have occurred. The port of Newchwang is icebound during the winter months, and any pronouncement of the railway with regard to this question as affecting this port would very likely be delayed until just previous to the opening of navigation in the coming Spring. In the sentence quoted by the Embassy “assuming that the through bill of lading facilities were made available to all steamship lines instead of only the Japanese lines as at present,” etc., by the use of the words “assuming that” was meant “in the event of” or “even if,” and there [Page 610] was no intention of giving the impression that the 30% reduction was to be extended to goods coming from Shanghai by other lines than the Nippon Yusen Kaisha.

In a despatch to the Mukden Consulate General dated December 2, 1914, certain information was transmitted with regard to this matter, and a quotation of the salient points embodied in that communication will more or less clearly acquaint the Embassy as to how imports of American goods from Shanghai for distribution to interior points are likely to be affected.

In the last sentence of my despatch to the Legation dated November 28, 1914, equal treatment asked for is but fair and should not be considered in the light of a special favor. By “all cases where goods,” etc., is meant such commodities as are shipped, say, from Shanghai to Newchwang for later distribution to inland points, the cargo shipped to correspond in all cases with the bill of lading shown to the railway as evidence of a right to the 30% reduction. The shipper at Shanghai could easily apportion each cargo shipment so that several or more bills of lading would be issued, and shipment to an inland point within a reasonable time limit—say four months—of any part of the cargo covered by one of the bills of lading could thus conveniently be effected. Most of the cargo received from Shanghai and shipped to inland points is contracted for locally after arrival in the port, and often several months must elapse before the sale is arranged. Such cargo should in all fairness be accorded the 30% reduction applicable to “through” shipments, and not the 15% reduction supposed to apply on “local” shipments. It is thus evident that most of the cotton goods shipped to Newchwang from Shanghai could not be sent under a, “through” bill of lading to an inland point, and under existing conditions such cargo is only granted the discriminative “local” rate reduction.

I do not know of one Chinese or non-Japanese local firm which imports cotton goods from Japan, such importers invariably using Shanghai as their base of supply. The Japanese importer takes especial care, as is to be expected, that the cotton goods of Japanese manufacture occupy first thought, and the supplying of any local demand for the American article of manufacture, from Japan, is considerably handicapped under the circumstances. The attempt to regain any part of the large American cotton goods trade previously had throughout Manchuria, cannot well be effected through Japanese firms, and as no other firms in Newchwang will import cotton goods stocks from Japan (owing to connections and affiliations being at Shanghai) it requires no stretch of the imagination to perceive the trade set-back the present existing condition of affairs is likely to cause. It is, therefore, important that an effort be made towards securing similar treatment on goods shipped from Shanghai to Newchwang, stored there temporarily until sold and then railed to an inland point, as is at present accorded through cargo shipped from Japan through the latter port.

I have [etc.]

Albert W. Pontius.