File No. 793.94/259.

Minister Reinsch to the Secretary of State.

[Extract.]
No. 540.]

Sir: Supplementing my despatch No. 538 of the 10th instant, I have the honor to report on the continuance of the negotiations between the Japanese and Chinese Governments with respect to concessions.

As reported in my telegram of February 12, 11 p.m., the diplomatic conference which had been scheduled for that day was postponed. I am now informed that the Chinese Government had declared its willingness to negotiate with Japan on twelve of the proposals of the latter, and had notified the Japanese Government of that fact. Negotiations were adjourned in order to give time for the consideration of this proposal by the Japanese Government. On February 13, however, the Chinese Government was informed that the Japanese Government adhered to its desire to have the entire list made the basis of negotiations; to this the Chinese are not ready to accede, as they believe that they have gone as far as the preservation of their sovereign rights and the treaty obligations to other nations will permit.

The twelve demands which the Chinese are ready to consider cover the demands regarding Manchuria, Inner Mongolia, and Shantung, together with a general non-alienation manifesto affecting the entire coast line of China.

Two demands with respect to Manchuria have been accepted: the control of the Kirin-Changchun Railway and the obligation not to pledge local revenues of Southern Manchuria and Inner Mongolia as security for any public loans without the consent of Japan.

The fact that the Chinese Government notified the Government of Japan that the permission to use a large part of the Province of Shantung for military operations would now be withdrawn, since the occasion for such use had disappeared, has been represented by [Page 90]the Japanese as being a calculated and malignant insult to Japan. As the permission to use the eastern part of Shantung for military purposes was given in connection with the attack upon Tsingtau, which has now been completely conquered, the withdrawal of such permission would appear a very natural thing.

Aside from this pretended discourtesy, no reason has been assigned why these unprecedented demands should be made upon China, nor has any quid pro quo been mentioned.

As it was reported here that a memorandum concerning the demands had been handed by the Japanese Foreign Office to the Embassies in Tokyo, I requested the American Ambassador there, under date of the 9th instant, to inform this Legation, as the knowledge might be of great value in understanding the situation here. On February 11 Mr. Guthrie replied that I was to be given a copy of the memorandum by the Japanese Minister at Peking. It appeared to me that in the absence of any intimations of a contrary intention on the part of the Department, it would be highly inadvisable for this Legation to assume vis-à-vis the Japanese Legation any cognizance of the demands which the latter is known to be urging upon the Chinese Government; and I so informed the American Embassy at Tokyo on the 12th instant, at the same time requesting a copy of the memorandum by telegraph. Late in the afternoon of February 13 the Japanese Minister called at my residence during my absence. I returned the call during the forenoon of yesterday (14th), when Mr. Hioki handed to me the memorandum, of which a copy is enclosed.25 On the same day I received from the Tokyo Embassy by telegraph the text of the same memorandum. The Japanese Minister stated that the memorandum had been given to the Department; I received it from him without comment either on his part or on my own.

It now appears that the demands which have thus been notified to the United States, and presumably to other Powers, are those from among the demands submitted to the Chinese Government which are in themselves less objectionable than the others and which, as reported above, the Chinese Government, after a careful analysis of the demands, had decided to negotiate upon with the exceptions already stated. From outward indications and from all the implications of the matter, it would now appear that the Japanese Government probably considers these demands as the maximum which it is ready to avow to the other Powers at present and as a minimum which it desires to enforce upon the Chinese Government. The additional demands which the Chinese Government has been asked to consider include the following:

That the Chinese Government will engage itself not to permit foreigners to operate mines in the neighborhood of the Hanyehping Company’s mines, nor to permit any enterprise which may affect the company’s interests directly or indirectly, without the consent of the company;

That the Chinese Government must engage effective political, financial and military advisers from among the Japanese;

[Page 91]

That the Japanese are to be permitted to carry on missionary work and that their hospitals, temples and schools are to have the right to own land in the interior;

That there is to be a joint organization by Chinese and Japanese of the police forces in important places;

That at least one-half of the required amount of arms must be purchased from Japan, or that Chinese arsenals must be put under Japanese engineers;

That railway concessions between Foochow and Wuchang, with various branch lines, are to be granted to Japan;

That Japan must be first applied to when foreign capital is needed for the construction of railways and ports and for the development of mines in Fukien.

The above is a statement of the substantial contents of the remaining demands, as ascertained from the most reliable sources and as generally accepted to be true in Peking.

The Chinese have made a classification of the demands, separating those which might be conceded from those that would infringe treaties and those that would abridge the rights of sovereignty. While they acknowledge no obligation whatever to make any grants to Japan at the present time, they are willing, nevertheless, in order to assure peace and friendly cooperation, to make the most far-reaching concessions consistent with national independence and treaty rights. In the future the Chinese Government will endeavor to adhere to the policy that concessions shall cover only specific enterprises or expressly delimited areas, which shall be commensurate with the scope of the respective undertaking, and that they will avoid all arrangements for a general preference or for options carrying contingent implications. Exceptional arrangements may have to be made in the regions of Manchuria and Shantung where unfavorable precedents exist; but it is hoped that by adhering to the policy above outlined, the principle of equal opportunity may be maintained even there in legal form, and in other provinces in substance.

Referring to my telegram of February 12, 9 p.m., I beg to enclose a copy of the telegram which was sent to the Associated Press on the 11th instant by its correspondent here (Mr. Frederick Moore), which was handed to the Legation subsequent to its transmission.

I have [etc.]

Paul S. Reinsch.
[Inclosure—Telegram.]

Correspondent Moore to the Associated Press.

Although following lacks important details, for instance, number Japanese officials to be employed, its [it is] substantially body of Japanese demands:

No section China’s coast or island off coast shall hereafter ceded, leased, another Power; China must employ Japanese in high official position in army, police, financial departments; China may call upon Japan alone for preservation her integrity; no foreigners but Japanese may [be] employed in arsenals; at least half arms and ammunition hereafter purchased must [be] from Japan; Japan will establish arsenal in China; China must grant same privileges as other nations to establish schools, churches, hospitals, missions and to purchase land therefor. In Yangtze valley, which British formerly considered their sphere influence, Japan requires joint control with Chinese of Hanyang [Page 92]ironworks, Tayeh mines, Pinghsiang collieries; China may grant no competing concessions to other foreigners; railway concessions are demanded from Nanchang to Chaochowfu, Nanchang to Kukiang, Nanchang to Wuchang, Nanchang to Hangchow. In Fukien Province where Japanese lay special claim because proximity Formosa, they require exclusion other foreigners from future railway, mining, dockbuilding concessions unless by Japanese consent. In Shantung, besides transfer all German rights, Japanese demand special concessions including railway from present line to northern coast. In Inner Mongolia, exclusion other foreigners from future mining, railway rights, except with Japan’s consent. In Manchuria, extension present railway territorial leases to ninety-nine years. In both Mongolia, Manchuria, privilege of immigration farming [as] well as trading population with rights settlement, land ownership; all railways demanded must [be] under Japanese not Chinese control. British papers published Far East suggest Japan breaking terms of alliance while Japanese papers criticise, in some cases violently accusing British of having profited by alliance and being selfish in Japan’s natural sphere; strained relations between these allies began when Japanese entered war and British sent fifteen hundred men to participate Tsingtau siege, which some Japanese publications considered not assistance but interference. Chinese Government pardoned Sun-yat-sen, Hwang-hsing, other rebel leaders; offered them high official positions if willing return and declare loyalty. To allay Japanese charges that Yuan-shih-kai’s Government anti-Japanese, cabinet will [be] reconstructed.

Moore.
  1. Not printed here, but see Ambassador Guthrie’s telegram of February 9, midnight.