File No. 893.773/42.

Chargé Wheeler to the Secretary of State.

No. 296.]

Sir: Since the writing of the Department’s instruction No. 140 of April 17 last, on the subject of apparent discrimination in the freight rates on the South Manchuria Railway, the Embassy’s Nos. 242 and 253 of March 29 and April 6, respectively, have informed the Department of later developments in the question.

[Page 619]

On receipt of the Department’s telegram of April 17, I at once took up the matter with the Foreign Office, on the basis of Baron Kato’s note No. 98 of March 19 (enclosed in our dispatch No. 242, above mentioned), stating that I was confident that the continuance of the old conditions at Dairen was clue only to the failure of the local authorities to receive instructions from the central office, and that I hoped the sending of these instructions need not be long delayed. The vice minister for Foreign Affairs promised to telegraph at once to Dairen and to ascertain where the trouble lay.

On May 5 the Consul at Dairen telegraphed me that the railway authorities informed him that a draft of agreement was being prepared there which would be submitted to the Imperial Government for their approval. On my next call at the Foreign Office I inquired regarding this draft, expressing some surprise that it should be thought to be necessary, since all that was desired in the case of shipments by American vessels was that rates and agreements be applied to them which were already operative as regards shipments in Japanese vessels. The reply was made that the local authorities at the port involved, knowing how to deal with Japanese companies, had not in the past gone very deeply into the question, but that now that arrangements were to be made with foreign companies, they felt the need of giving the matter more careful study and employing a more regular form of contract.

I have the honor to enclose herewith copies of more recent correspondence between myself and the Vice Minister for Foreign Affairs on the subject. The Embassy is not as yet in receipt of a copy of the “draft contract” said to be in preparation.

The Department’s instruction No. 140, above referred to, states that “no line of Japanese steamers appears to be engaged in carrying goods to that port” (Newchwang). According to the report of the Commissioner of Customs for the year 1913 (the latest report on file at this Embassy), clearances and entries of Japanese steamers at Newchwang totaled 298, as against 177 British and 114 Chinese vessels. What proportion of these ply between Newchwang and Shanghai, these statistics do not show; I am informed, however, by the Nippon Yusen Kaisha that this company maintains a regular service on that route.

I have [etc.]

Post Wheeler.
[Inclosure 1.]

The Vice Minister for Foreign Affairs to Chargé Wheeler.

Dear Mr. Wheeler: In reference to our conversation the other day respecting the conclusion of a contract for transportation connection between the South Manchuria Railway Company and the American Steamship Company, we made inquiry at once through the Railway Board with regard to the progress of the negotiations at Dairen; and received from the Board a telegraphic reply of the Railway Company, stating that as it was necessary first to make investigations concerning the conditions of the proposed contract and the manner of carrying them out, these investigations were being made with great expedition. The Board was next desired to urge the Railway Company to accede to the proposal of your Consul at Dairen and bring the negotiations to a satisfactory [Page 620] conclusion as soon as possible; and accordingly the Board instructed the Company by telegraph on the 6th instant to frame the draft contract at an early date and open negotiations with your Consul. The Company has sent a reply to the Board, expressing its compliance with these instructions.

K. Matsui.
[Inclosure 2.]

Chargé Wheeler to the Vice Minister for Foreign Affairs.

Dear Mr. Matsui: I beg to thank you most sincerely for your note of the 18th instant, respecting the matter of transportation connection between the South Manchuria Railway Company and American vessels.

It is my understanding—from the declaration of the South Manchuria Railway Company as quoted in his excellency Baron Kato’s note, No, 98 of March 19 last, to the Ambassador—that the reductions in rates and the treatment provided in the draft contract now in preparation for application to American vessels at Dairen, will be the same as in the case of Japanese vessels; and that it is the intention of the Railway Company to make with American vessels at Newchwang and Antung similar agreements which shall grant the same reductions as in the case of Japanese vessels.

Inasmuch as your note does not describe the nature of the draft contract referred to, may I ask you to be so kind as to confirm my understanding of these points?

Post Wheeler.
[Inclosure 3.]

The Vice Minister for Foreign Affairs to Chargé Wheeler.

Dear Mr. Wheeler: I beg to acknowledge the receipt of your note of the 20th ultimo, relative to the transportation connection between the South Manchuria Railway and the American steamship company. Having at once referred the matter to the Railway Board, I am now in receipt of a reply to the following effect:

The freight rates to be charged upon formation of the direct transportation connection between the American steamers and the South Manchuria Railway at Dairen, Newchwang, and Antung will not, as a matter of course, differ from those chargeable in case of a similar connection with Japanese steamers; and in regard to the handling of cargoes and other matters, the treatment accorded in the case of a connection with Japanese vessels will be generally followed. As, however, the two companies intend to enter into a voluntary contract after consulting their mutual convenience, the Board is unable, pending the presentation of the draft contract for its approval by the Railway Company, to give a definite answer with respect to matters of detail.

Yours very sincerely,

K. Matsui.