File No. 893.773/39.

Ambassador Guthrie to the Secretary of State.

No. 242.]

Sir: My despatch No. 234 of the 8th instant transmitted as enclosure a copy of a representation made by the Embassy to the Foreign Office on the subject of apparent discrimination in freight rates on the South Manchuria Railway against shipments from Shanghai. [Page 616] I have the honor herewith to transmit a copy of a note from the Foreign Office received in reply.

In a recent conversation with the Minister for Foreign Affairs he told me that the above-named company had desired to promote the commerce of Dairen and to favor it even at the expense of Newchwang, for the reason that at the latter place part of the trade to Mukden and beyond went by the Chinese railway, whereas by Dairen the whole went by the South Manchuria road. He said that as the matter had been explained to him the regulations did not discriminate between the trades of different countries at all, American trade being able to take advantage of the regulations just as Japanese trade had. I pointed out that while this was theoretically true, practically it was not correct; that American trade all went by way of Newchwang, where it was very much discriminated against by this regulation; that while theoretically goods going from Shanghai by way of Newchwang could get the benefit of the discount on through rates provided they were billed through, the only steamship line which could issue the through bills was composed of the South Manchuria Company’s own ships. Baron Kata admitted that this point should be corrected and arrangements made to permit other lines to send goods through.

As to the regulation providing that only through goods could be entitled to the discount, he seemed convinced that American trade had no just cause of complaint thereat. He said that as a matter of fact Japanese merchants at Dairen had complained bitterly of the same thing, alleging that insistence upon this point must drive them out of the trade. In spite of this, however, the company had adhered positively to the regulation.

It will be noted by the communication from the Foreign Office that the railway company expresses its willingness to form a connection for joint transportation with any foreign steamship company so desiring, and to allow to such foreign company the same reduced rates on through goods which are now given to through goods carried by the railway company’s own steamers, and that this regulation applies both at Newchwang and Dairen.

I have [etc.]

George W. Guthrie.

Baron Kato to Ambassador Guthrie.

No. 98.]

Monsieur l’Ambassadeur: I have the honor to acknowledge the receipt of your excellency’s note under date the 6th instant, relative to the reduced freight rates on the South Manchuria Railway.

I beg to state that having referred the matter to the authorities concerned, I am now in receipt of a reply therefrom to the following effect:

The special reduced rates at present in force are allowed to certain goods which are sent direct through Dairen, Newchwang, or Antung to Mukden or specified points north of that city; and it is intended that the same treatment shall be accorded whether the port of export and place of origin of the goods in question and the nationality of the vessels carrying them be Japanese or foreign. If, however, the said goods are, instead of being sent direct, first landed at Newchwang, Dairen, or Antung, and then forwarded to Mukden or specified points north of that city, such goods are, even if they are Japanese, charged somewhat higher rates then those allowed to the above-mentioned through goods. On this point also, no special protection is given to Japanese goods against foreign, and [Page 617] they are all treated, whether Japanese or foreign, in the same manner with absolute impartiality. It may be added that for effecting the through transportation above referred to, it is necessary that a connection for joint transportation should be first established between the steamship company and the South Manchuria Railway Company, and at present the steamship companies having such connection with the Railway Company are the Osaka Shosen Kaisha and the Nipon Yusen Kaisha. But if any foreign steamship company desires to form such connection for joint transportation, the Railway Company is willing to comply and will certainly allow the above-mentioned reduced rates to the through goods carried by the steamers belonging to such company. Indeed, the Railway Company lately received from the American Consul at Dairen a letter inquiring whether it was willing to make an arrangement for joint transportation identical with that in force with the two Japanese steamship companies above named with ah American steamship company for the transportation of through goods from San Francisco; and it is the intention of the South Manchuria Railway Company to comply at any time with the request and make an arrangement for allowing to American goods the same reduction in rates as in the case of Japanese goods.

I avail [etc.]

Baron Takaaki Kato.