File No. 893.773/37.

Ambassador Guthrie to the Secretary of State.

No. 234.]

Sir: With reference to my despatch to the Department No. 184 of January 6 last, I have the honor to state that since the date of that despatch the British Ambassador has informed me that in view of all the circumstances, and considering the smallness of British interests involved, he does not feel disposed to join in any representation to the Imperial Government on the subject.

I have found through correspondence with the Consuls at Newchwang and Dairen and by communication from the British Consul at the latter place (copies of which have been given me by Sir [Page 614] Conyngham), that a discount of thirty per cent on the specific rates is now allowed on cotton goods shipped by Japanese lines from Shanghai to Newchwang and consigned to points north of Mukden. I have also learned that the railway authorities assert that a similar discount will be allowed on such shipments by British lines making suitable arrangements with the railway company. I can not find, however, that any British line has entered into such an agreement.

As the matter stands at present, it will be seen that American cotton goods shipped from Shanghai in Japanese bottoms and consigned to points north of Mukden via Newchwang, are allowed the thirty per cent discount on the specific rates; but such discount is not allowed on goods shipped by other lines or on goods consigned to Newchwang and subsequently reshipped from that place to points north of Mukden. It is only on these two points, therefore, that claim of discrimination was made by me.

While the former Consul at Newchwang was of the opinion that an effort should be made to induce the railway company to grant a similar discount of thirty per cent on goods shipped from Newchwang to points south of Mukden, I do not understand the instructions of the Department to authorize me to raise this question, as no discrimination is involved in it.

In view of the decision of the British Ambassador not to join in any protest to the Imperial Government, I have filed a representation on behalf of American trade, a copy of which is enclosed herewith. I have taken this action at the present time for the reason that the established rates now enforced, expired on the 31st of this month, and it appears from the newspapers that a conference is now going on in Tokyo between the boards of the Government Railways, the Chosen Railway, and the South Manchuria Railway, at which the fixing of the rates for the next year is under consideration.

I am just informed that there are no American merchants now carrying on business at Newchwang, all of them having withdrawn some time ago except one who has since died.

I have [etc.]

George W. Guthrie.

Ambassador Guthrie to Baron Kato.

No. 104.]

Your Excellency: Pursuant to instruction from my Government, I have the honor to call the attention of the Imperial Government to an alleged discrimination in freight rates charged by the South Manchuria Railway Company on cotton goods of American manufacture, shipped from Shanghai to consignees at Newchwang, and from there forwarded to purchasers at various points in Manchuria north of Mukden.

It is stated that a discount of thirty per cent on established rates is allowed on Japanese cotton goods shipped through from Japanese ports, while the full established rates are required on American cotton goods shipped from Shanghai, unless carried in Japanese bottoms and consigned directly to points in Manchuria north of Mukden. I am informed that notice has been given at Newchwang that a similar privilege will be extended to such British lines from Shanghai as entered into the same arrangements with the South Manchuria Railway Company as do the Japanese lines; I am not aware, however, that such [Page 615] arrangements have yet been made by any British line, nor, so far as I have been able to learn, have the specific terms been announced on which arrangements could be made. At present, therefore, cotton goods shipped from Shanghai via Newchwang, can secure the discount allowed on such goods from Japanese ports, only when shipped in Japanese bottoms and when consigned directly through from Shanghai to points north of Mukden.

The established course of trade in American cotton goods intended for points in Manchuria has been to ship them to Shanghai, from which point they are consigned to Newchwang, where the consignees reship them to the purchasers at various points in the interior. Under the regulations complained of, goods so shipped are not allowed the discount of thirty per cent on established rates granted to cotton goods from Japan; and even if consigned from Shanghai direct through interior points without the intermediate delivery to consignees in Newchwang, the discount it at present allowed only when these goods are shipped in Japanese bottoms.

American shippers assert, and their claim seems not without justification, that owing to the character of the trade and the manner in which the goods are handled at Newchwang, it is practically impossible for them to change the mode of shipment and instead of consigning their goods in the first place to Newchwang, to consign them direct to the purchasers at the final points of destination in the interior. It is asserted too, that to require them to do this as a condition on which the rebate on railway freights would be allowed, can be of no benefit or advantage to the railway company. The goods under any circumstances must be transshipped at Newchwang, where the presence of a consignee to receive and care for them relieves both the shipowners and the railway company of labor and responsibility in handling them.

It would seem, therefore, that no reason exists which would justify any greater charge by the South Manchuria Railway Company for the transportation to interior points of goods consigned from Shanghai to Newchwang in this way than for goods shipped from Japanese ports through Newchwang and directly consigned to the same interior points. And it seems at the same time apparent that such greater charge cannot but impose upon the trade a heavy burden which is incompatible with the principle of equal opportunity.

I have been instructed to bring this matter to your excellency’s attention, pointing out that the regulations to which exception is made appear to discriminate against American trade, and to this extent to be inconsistent with the policy of the open door—a policy which has so long been mutually upheld by our two Governments, and Japan’s adherence to which was again stated in the address of the Premier on the 27th of last month, in his excellency’s declaration that “our Government does not help our merchants to contend with foreign merchants in China.”

In view of the clear understanding in regard to this wise and beneficent policy which has so long been followed by both Japan and the United States, the Department of State has full confidence that the regulations pointed out in the above were adopted by the local authorities without a full appreciation of their effect upon American trade. I therefore have no hesitancy in calling your excellency’s attention to the dissatisfaction thus caused, in the hope that the situation will be carefully considered, and that if the facts be found to militate against that principle of equal opportunity under which the trade of our two countries has up to this time developed, an adequate solution will be found by the Imperial Government.

I avail [etc.]

George W. Guthrie.