File No. 893.773/46

Ambassador Guthrie to the Secretary of State

No. 457

Sir: I have the honor to acknowledge the receipt of the Department’s instruction No. 236 of the 25th of January, 1916, relating to the subject of preferential freight rates allowed certain goods shipped into Manchuria over the South Manchuria Railway, and to attach hereto a copy of a note which I have handed to the Foreign Office in accordance with the Department’s instruction.

In this connection permit me to point out that, while the Imperial Government appears to be willing to concede the rebate to all goods shipped directly through Newchwang to points north of Mukden, its purpose seems to be to prevent goods which have been consigned to Newchwang and there delivered to the consignee, from thereafter being forwarded to points beyond Mukden, and claiming and receiving the reduction of 30% allowed on goods shipped directly through to the ultimate point of destination.

As I have heretofore reported (despatch No. 242 of March 29, 1915), in my conversation with Baron Kato, former Minister for Foreign Affairs, he was very positive on two points:

  • First, that equality of treatment does not require the South Manchuria Railway Company to allow the same discount on goods shipped to points south of Mukden as on goods shipped to points north of Mukden;
  • Second, that because a discount was allowed on Japanese goods shipped from Japan direct through Newchwang to points north of Mukden, the railway company was not required to allow a similar discount on goods shipped to consignees in Newchwang who received the goods, put them in their storehouses, and subsequently forwarded them by rail to purchasers at points north of Mukden.

Baron Kato stated that consignees receiving goods at Newchwang could and often did forward their goods by the North China Railroad, thereby diverting trade from the South Manchuria line, and that it was to prevent this that the rebate was restricted to goods consigned directly through Newchwang to points north of Mukden.

The second point is the one which has given me trouble and I desire the views of the Department on it. The present Foreign Minister, Baron Ishii, has not yet referred to this, but I anticipate that he will do so now that the discussion has been brought back to the specific question of the discrimination complained of, and will wish to know whether I have any suggestion to make by which goods [Page 449] coming by tramp ships can be consigned direct from point of shipment to points north of Mukden.

In reference to the assertion of the Nippon Yusen Kaisha, quoted by Mr. Wheeler in his despatch No. 296 of June 9, 1915, that this company has a regular service on the Shanghai-Newchwang route, I beg to say that Mr. Pontius’ statement that “the Nippon Yusen Kaisha maintains no regular service between Shanghai and Newchwang,” is correct. The company, however, operates a regular line between Newchwang and Dairen, which links with the Osaka Shosen Kaisha’s regular line between Dairen and Shanghai, which, they claim, provides a regular Japanese service between Shanghai and Newchwang. I enclose herewith a chart showing steamship routes for 1915, issued by the Department of Finance, on which the lines above mentioned appear.

I have [etc.]

Geo. W. Guthrie

Ambassador Guthrie to the Minister for Foreign Affairs

No. 474

Your Excellency: I have the honor to acknowledge the receipt of your excellency’s note No. 267 of October 27 last, respecting the discrimination against American trade due to the preferential rates granted to Japanese shippers on the South Manchuria Railway from Newchwang. A copy of this note was forwarded to my Government from whom I am now in receipt of instruction to bring the matter once more to your excellency’s consideration.

I beg to call attention to the fact that the question of an agreement between ship companies and the South Manchuria Railway is entirely aside from the objection made by my Government to the regulations of that company which discriminate against American goods shipped from Shanghai or other ports via Newchwang to points on its line north of Mukden, as I had the honor to point out in my note to your excellency’s predecessor, No. 104 of March 6, 1915.

In bringing this question again to your consideration with the request that such a change be made in the regulations of the South Manchuria Railway Company as will give to such American goods the benefit of the 30% discount on specific rates allowed on Japanese goods arriving at Newchwang by Japanese lines, I am instructed to state that in the view of my Government “the right of American goods to receive the reduced rates cannot be made to depend upon the route of shipment, the nationality of the importing vessel nor upon the signature by shipping companies of a contract with the railway, granting preferential rates. The American Government trusts that the Imperial Japanese Government may be disposed to instruct the authorities of the South Manchuria Railway that the conditions under which reduced freight rates are allowed must be such as will afford real equality of treatment for the goods and shipping of all nationalities.”

I avail [etc.]

Geo. W. Guthrie