Papers Relating to the Foreign Relations of the United States, With the Address of the President to Congress December 5, 1916
File No. 893.77/1503
Minister Reinsch to the Secretary of State
Peking, November 26, 1915.
Sir: I have the honor to enclose, for the information of the Department, copies of despatches dated November 20 (No. 123), 23 (Nos. 124 and 125),2 and 24 (No. 126),2 from the Consulate General at Hankow, concerning materials for the Hukuang Railways; a copy of the Legation’s instruction No. 1330, of even date to Hankow, and a copy of a note dated to-day, in which the Legation is lodging a protest with the Minister of Communications in regard to specifications for bridges included in requisition No. 65.
I have [etc.]
Consul General Cunningham to Minister Reinsch
Hankow, November 20, 1915.
Sir: It has been known to this office for a month that specifications were being prepared by the so-called British section of the Canton-Hankow Railway for locomotives and rolling stock, but it was not known earlier than the 17th instant that tenders had actually been invited for the supply of eight (8) locomotives. Upon inquiry to Dr. Jeme Tien-yow, director-general, it was ascertained that specifications had been sent to Messrs. Burnham Williams and Company, the Baldwin Locomotive Works, and the American Locomotive Company for quotations on locomotives, and on the 18th Director-General Jeme stated
Please note that in view of the fact that all the works of England, Germany and France are unable to supply these goods on account of the war in Europe, no tenders will be invited this time, as reported by the managing director of the section concerned.
The managing director and Mr. A. G. Cox, engineer-in-chief, were both called upon yesterday in Wuchang to inquire why these indents had not been forwarded in accordance with Sections 2 and 3 of resolutions regarding locomotives and rolling stock, and the former official stated that it was entirely due to the European war. He further assured me that it was not intended to establish a precedent in any way, nor was it intended to ignore American interests, but it seemed for the best interest of all to have the tenders made privately without waiting for ninety days to elapse as some of the locomotives were urgently needed. Time seemed to be the only factor to him as he stated that they had received instructions to complete the railroad to Changsha by the end of 1916, though it is very difficult to see any reason for this undue haste to justify ignoring the established practice.
Mr. A. G. Cox, engineer-in-chief, quite characteristically declared that he had the right to purchase locomotives or any other supplies wherever and whenever he liked. He stated present tenders would be secured by American manufacturers, he regarded the resolutions as impractical and more than useless as they dispensed with the technical knowledge of an engineer and required him to accept whatever was offered him from any country so long as it was manufactured in accordance with that country’s specifications. He seemed to forget that he was a party to the resolutions. Mr. Cox has impressed me at all times, and particularly yesterday, as a man to whom no law or regulation is known except his own idea. I do not consider that he is anti-American any more than he is anti-anyone else who happens to criticise or attempts to regulate his manner of action. He stated that the United States [Page 165] had only two locomotive builders who could, by any possible chance, tender for locomotives and he did not propose that tenders should be received from any American, British, or other firm which was not on his approved list. Under these circumstances he saw no reason for public tenders; therefore the two American companies were asked to tender. It is probably known to the Legation as well as to this Consulate General that the “approved list” for British tenders is a very important one, and none but those on this list are permitted to tender for supplies required in the British colonies.
Mr. Cox’s position, and also that of all the railway authorities, is absolutely untenable if the resolutions regarding locomotives and rolling stock are to be considered as in force, and this is true even though this office is assured that it is not to establish a precedent for future tenders. It seems highly probable that time is a factor of some importance, though these gentlemen exaggerate it at the present moment, but it is thought that these specifications have been completed sufficiently long to have permitted tenders being made by the end of this year if public tenders had been called, which is as early as private tenders may be expected. It is possible that these supplies can only be had by the United States, and in so far as our manufacturers are concerned, nothing might be lost to permit these tenders being made in the manner suggested. However, conditions of the English market are not known to this office. There is a further reason for objecting to the present mode of tendering, because this office is informed by Mr. G. L. Miner, representative of the American Locomotive Company, that if the particulars approved are strictly complied with, it will be necessary for an unusually high price to be charged, as they are upon the British lines, and there is a probability that once started along this line and normal conditions are resumed in Europe, American manufacturers will not be able to tender successfully. Section 5 of these resolutions specifically guarantees that tenders for the supply of locomotives shall be in strict accordance with the recognized standards and the best practice prevailing in the four countries participating in the loan.* * *
I have [etc.]
Minister Reinsch to Consul General Cunningham
Peking, November 26, 1915.
Sir: I have to acknowledge the receipt of your telegram of November 24, 4 p.m., which reports that ten locomotives are now to be ordered on public tender.
Your despatch No. 123 of the 20th instant clearly brings out the fact that while the asking for bids for locomotives in this case could be explained as due to the present abnormal conditions, yet if allowed to pass it would constitute a bad precedent on two points: 1st, the purchase of important materials without public tenders; and 2d, the specification of a particular type of rolling stock. As such a practice, no matter how unexceptional the present motives may be, is distinctly contrary to the provisions of the loan contract, and the resolutions, interpretative thereof, which have been adopted by the responsible engineers and ratified by the Minister of Communications, it is very important that an order without pubic tender and upon specifications which do not give an equal standing to the accepted engineering practice of each of the four nations concerned should not have been allowed to pass without protest.
I also have to acknowledge the receipt of the despatches (Nos. 124 and 125) of November 23, in which you report on the unwillingness of the director-general to modify requisition No. 65. For your information, I am enclosing a copy of a protest sent to the Minister of Communications to-day.
It is the opinion of this Legation that it should be settled, once and for all, that the procedure of awarding contracts for materials is to conform strictly to the letter and spirit of the loan contract and the resolutions of the engineers. Any other course of action would lead to endless uncertainty and friction. The Minister of Communications having sanctioned the resolutions, there should be no further question of their application. They provide a clear and simple [Page 166] rule, by adherence to which all difficulties can be avoided and the manufacturers of the nation concerned placed upon a footing of equal opportunity.
Should there be continued difficulty in obtaining adherence to the resolutions, it is my intention to recommend that the American Group withhold its quota of the loan funds until the matter is equitably adjusted.
I am [etc.]
Minister Reinsch to the Minister of Communications
Peking, November 26, 1915.
Excellency: I have the honor to inform you that the managing director of the Hukuang Railways has, on November 22 last, declined to act upon a protest of the American Consul General at Hankow that the specifications in requisition No. 65 (for bridges) be modified so as to conform to the resolutions regarding the standardization of bridges.
These resolutions established the principle that in specifications for bridges, the recognized standards and best practice prevailing in each of the four countries shall be accepted.
Requisition No. 65 requires that the bridges ordered shall be completely erected in the shops before being shipped. This procedure is not in accordance with the recognized standards and best practice prevailing in the United States. The methods of manufacture there have, through great diligence and expense, been made mathematically accurate to such an extent that shop erection is not practiced, as it would be an entirely superfluous work and expense.
Specifically to require shop erection is therefore to make a condition contrary to the recognized standards and best practice prevailing in the United States, and for that reason also contrary to the resolution adopted by the engineers, which have been given authority by instructions from your excellency.
I therefore have the honor to request that the managing director be instructed to have requisition No. 65 and all future requisitions drawn so as to be in accordance with the resolutions and the requirements of equal opportunity, under which the standard practices of the four countries concerned must be recognized.
I avail [etc.]