File No. 893.773/43.

Chargé Wheeler to the Secretary of State.

Sir: With reference to my despatch of the 9th instant, No. 296, I have the honor herewith to transmit a copy of a letter with enclosures, dated June 16, received from the Consul at Dairen.

I have [etc.]

Post Wheeler.
[Page 621]

Consul Williamson to Chargé Wheeler.

Sir: I have the honor to transmit herewith, as per list at the end of this letter, copies of correspondence between this office and the South Manchuria Railway Co., which I have not previously sent you.

I am now willing and desirous of dropping this matter until the arrival of some American ship brings it up in concrete form.

You will notice that I have been careful to state that I did not admit the necessity of an agreement with the South Manchuria Railway Co. The semi-governmental character of this company makes its acts more or less those of the Japanese Government; therefore rates granted by it to one class of goods are officially discriminatory unless granted to another; and, in my opinion, goods of the special class coming here in any American vessels must receive the special rates, agreement or no agreement. Indeed, in my opinion, there is discrimination whatever the means by which American goods arrive—whatever the nationality of the vessel—if Japanese goods are granted cheaper rates. The importing-vessel scheme is, to me, simply a subterfuge which does not affect the fact of discrimination one way or another.

I should be glad to have the Embassy’s opinion in regard to this matter.

I have [etc.]

A. M. Williamson.
[Subinclosure 1.]

Consul Williamson to Baron Nakamura.

Your Excellency: I have the honor to acknowledge the receipt through Mr. Secretary Y. Kubo, of your excellency’s letter of yesterday’s date, informing me that your excellency’s company is “now preparing the draft of an agreement to submit to the Imperial Japanese Government for sanction,” and that later on I will receive a copy and form of application.

While thanking your excellency for the communication under acknowledgment, I take the liberty of pointing out that your excellency’s letter seems to imply that a new—and therefore different—form of agreement is being prepared. As I did not understand that simply an agreement was desired, but an agreement identical with that now in operation with at least two Japanese shipping companies, the Nippon Yusen Kaisha and the Osaka Shosen Kaisha, I should be grateful for any information your excellency can give me as to why a new form of agreement is necessary. I feel confident that your excellency’s expected reply will help greatly to clear up this point.

I have [etc.]

A. A. Williamson.
[Subinclosure 2.]

Y. Kubo, of the South Manchuria Railway Company, to Consul Williamson.

Sir: I have the honor to acknowledge the receipt of your note addressed Baron Nakamura of this Company, under date of the 5th inst., regarding the specific through goods on the South Manchuria Railway.

In reply to the query contained in your note why a new form of agreement is necessary, I am instructed to state that, with a full regard for the principle of equal opportunities in South Manchuria, we feel it necessary to take into consideration the differences that exist in the practices re the transportation business in vogue in the United States and Japan, the dissimilarity in the currency systems of both countries, etc., in our task of drafting the agreement and the form of application as referred to in our reply to you under date of the 4th inst.

I beg to make mention of the above in order to explain to you that, whilst [Page 622] a wholly different agreement is not under preparation from the existing one, there are circumstances which render a literal translation of the existing agreement not exactly answerable for the purpose.

We trust that this explanation will be found by you satisfactory.

We have now a great favor to ask of you. As we have taken up the study of the subject under notice, we have become extremely desirous of learning through your kind offices for reference sake the following:—

Names of American steamship companies which are desirous of entering into the specific through goods traffic arrangement with this Company.
What classes of steamers will be used, and on what schedule these steamers will be run to engage in the specific through goods traffic arrangement?
Chief articles of specific through goods to be carried by these steamers.
Ports of call for these steamers, if any.
Information on other matters which are to form the contents of the agreement in view.

We are sorry to trouble you with all these questions, but as a matter of fact information on all these questions is considered by us as essential in drawing up the draft agreement, etc., in question.

Thanking you [etc.]

Y. Kubo, Secretary.
[Subinclosure 3.]

Consul Williamson to Mr. Kubo.

Dear Mr. Kubo: I beg to acknowledge, with thanks, the receipt of your letter of yesterday’s date in reply to mine of the 5th. I note the reasons why a change in the form of agreement is deemed necessary, and thank you for the trouble you have taken in making the explanation.

You also state that certain information is desired relative to the American firms desirous of entering into an agreement, contemplated ports of call, cargoes, etc., under 5 heads.

In reply, I beg to state that as the desirability or not of entering into an agreement with your company depends a great deal upon the nature of the agreement, none of the American shipping firms yet wishes to have its name mentioned in connection therewith; at the same time, all are desirous of learning the requirements and of securing a sample copy of an agreement form. I refer more particularly to Pacific Coast companies, although if anything comes of this matter and it appears that trade can be worked up, it is very likely that trade with the Atlantic and Gulf ports would also be interested, now that the Panama Canal is open. Indeed, the all-water route to Chicago has possibilities in this connection.

Hence, with the best desire to help you in every way I can, I am unable to give you specific information on the points mentioned in your letter. I may say, however, that other China. Coast ports would probably be included in the voyages of these vessels, such as Tientsin, Tsingtau (Seitou), Lungkou or Chefoo, etc.

Perhaps, if you will send me a blank form of agreement for use with Japanese steamship companies, we might be able to make such alterations as would meet the difficulties you have encountered and thus simplify matters.

A. A. Williamson.
[Subinclosure 4.]

Mr. Kubo to Consul Williamson.

Dear Sir: I beg to acknowledge the receipt of your letter dated May 19.

I note from your letter that none of the American Shipping firms yet wishes to have its name mentioned in connection with the subject of the specific through goods under notice and also that you are unable to favor us with specific information on the points mentioned in my previous letter dated May 18.

[Page 623]

In this connection we beg to remind you that, in your first letter addressed to me dated February 12 last, you stated that you were then making arrangements with an American steam ship company to make Dairen a port of call; and also that, in your second letter, addressed to Baron Nakamura, our President, you hinted at your intention to transmit such information on the subject as you might obtain from us to the American steamship company at San Francisco at present contemplating opening a line to Dairen.

As stated in my last letter, the differences that exist in the practices re the transportation business in vogue in the United States and Japan, the dissimilarity in the currency systems of both countries, etc., make up circumstances which render a literal translation of the existing agreement in operation between this Company and the Japanese sniping companies concerned not exactly applicable to the case under discussion.

Since we have failed to obtain the desired data from you, we have pleasure in submitting to the consideration of yourself and the parties directly interested in the matter the chief items of the proposed agreement as hereafter mentioned, in addition to a Japanese copy of the existing agreement with the Japanese steamship companies, as requested by your good self:

The transportation zones shall be between the American coast ports and points on the South Manchuria Railway via Dairen, the through traffic stations to be left to mutual agreement separately.
The American steamship companies which are to be parties to the agreement under consideration shall open and maintain a direct regular steamship route between the United States and the port of Dairen. How often the service shall be operated shall be fixed by agreement.
The American steamship companies shall keep each an agency or an agent at Dairen to look after the general business related to the specific through goods traffic.
Each contracting party shall have its responsibility limited to within the railway and/or steamship routes under its own control, that is to say, neither side shall be held responsible for aught conjointly with the other side.
The specific through freights shall be the sums of the stipulated tariffs of the railway company and the steamship company. The exchange rate for each other’s currency shall be fixed separately by agreement.
The conditions to be included in the through bill of lading, together with its form, shall be fixed by agreement.
Any disputes that may arise between the contracting parties shall be dealt with by arbitration.
Matters other than above mentioned shall be determined by agreement.

We are inclined to think that the above will be found sufficient as the basis on which the new agreement under contemplation may be framed, and in submitting the same to you we hope that you will be so good as to exercise your influence to ask the American steamship companies that may be interested in the matter to draw up a draft agreement for us to consider with them, as mentioned in my letter dated May 4, on condition that the same take effect subject to the sanction of the Imperial Japanese Government.

Hoping that we shall hear favorably from you this time,

Y. Kubo.
[Translation of inclosure with the above.]

Contract between the South Manchuria Railway Company and Japanese steamship companies for through goods traffic.

  • Article I. The articles to be handled and the districts of origin and/or destination for this traffic shall be determined by special agreement.
  • Article II. Through goods shall invariably be delivered and received at the Dairen wharves.
  • Article III. With regard to damage to through goods, when it cannot be determined which party is to blame therefor, both shall bear the loss (indemnity), each in proportion to the freight received by it for carrying the goods.
  • Article IV. The party with which the cargo originates shall, by the end of each month, make a report for the preceding month to the party delivering the goods, allotting and setting the account.
  • Article V. Should either party desire to examine the books of the other party at any time, such books must be thrown open for examination as requested.
  • Article VI. Freight and other charges on through goods shall be made in accordance with the rates made by each party, and shall be added and collected together.
  • Article VII. Customs formalities at Dairen on through goods shall be performed and duty and other charges paid, in the case of exportation, by the Japanese steamship company; and in the case of importation, by the South Manchuria Railway Co., each for the other.
  • Article VIII. Special arrangements shall be made regarding processes for putting in operation this contract, and with regard to shipping documents, bills of lading, etc., for through goods.
  • Article IX. This contract may be abrogated by either party on 60 days’ notice.

N. B.—In addition there is a supplementary agreement, containing articles which the contract stipulates are to be specially arranged, as well as detailed rules of procedure.

Furthermore, the three following conditions are contained in the Japanese steamship companies’ through bills of lading, which are specially agreed to by shippers in regard to transportation: [Page 624]

Although claims arising from transportation can be collected and the diversion of securities and rights may be made by one company as representative of the other, yet each will take charge of transportation over its own lines independently and make itself responsible therefor.
The responsibility of a company which has engaged in transportation ceases as soon as its business is handed over to a successor. In regard to this, the right to demand freight or other rights arising from transportation are not affected, whatever circumstance may occur even before transportation be completed.
This transportation contract is subject to Japanese law.

[Subinclosure 5.]

Consul Williamson to Mr. Kubo.

Dear Mr. Kubo: I beg to acknowledge the receipt of your letter of the 5th instant, with inclosure.

In reply, I beg to say that certain new shipping laws, which have not yet gone into effect, have caused American steamship owners to give considerable thought to the future. I refer to the new Seamen’s Laws, or the La Follette Bill, which was made law by the American Congress. This has upset all previous calculations and left plans for the future uncertain.

Without admitting in any way the necessity, from my point of view, of an agreement with your company, I simply wish to assure you of my desire, by this correspondence, to discount future difficulties by doing everything I can to keep active the equal-opportunities principle by securing equal treatment for American ships with Japanese vessels, before possible definite cases can occur.

I thank you for your courtesy, and beg to remain dear Mr. Kubo,

Very respectfully yours,

A. A. Williamson.