File No. 893.77/1560

Minister Reinsch to the Secretary of State


My telegram of October 19. Carey informs me that the International Corporation has suggested to him not to proceed with Fengcheng railway preliminary survey until the Russian protest is cleared up. Such deference to an unsubstantiated claim would endanger the rights of Americans to do business in China. It would seem essential that Russia be held to the letter of any concessions made, and not be allowed to claim exclusive sphere of action north of the Great Wall, because otherwise other Powers would be encouraged to treat as exclusive spheres regions in which they have specific concessions, and under such a broad interpretation Americans would stand excluded everywhere. It would also seem that on account of the financial support accorded to Russia, American capital would be [Page 192] in a particularly strong position to prevent action hostile to America and not in accord with the duty of Russia to facilitate compensation for the exclusion of American railway enterprise from Manchuria, even to the extent of allowing Americans to construct Kalgan Railway itself as suggested by the Russian Government in 1910.

The question is one between Russia and China. The Chinese Government feels entirely sure of its ground in this matter. The Minister of Communications today informed Carey and Chinese Secretary of Legation that his Government assumes responsibility, and he intimated that it would feel its rights compromised by a withdrawal or hesitation on the part of the American International Corporation; and he expressed apprehension lest demonstration of timidity would invite protest by other nations against all other proposed American railway lines.

It is desirable that the preliminary survey should proceed in order that commercial soundness of the project may first be determined.