File No. 893.773/46

The Secretary of State to Ambassador Guthrie

No. 290

Sir: The Department is in receipt of your despatch No. 457 of March 3, 1916, relating to the subject of preferential freight rates allowed certain goods shipped into Manchuria over the South Manchuria Railway.

[Page 450]

The Embassy appears to have misunderstood in some degree the Department’s instruction of January 25 last. That instruction related not alone to the shipment of goods through Newchwang to points north of Mukden but to the whole subject of reduced rates granted upon conditions with which American merchants cannot comply. The objection applies equally to goods shipped through Newchwang, Dairen or other Manchurian ports.

The particular reference in the Department’s instruction of January 25 to paragraphs in an earlier instruction relating to shipments through Newchwang was intended to point out to the Embassy, as it did, the contradiction between Mr. Wheeler’s despatch and the report of Mr. Pontius. It was not intended that the Embassy’s representations to the Japanese Foreign Office should be limited to shipments through Newchwang.

The Department notes your request to be instructed how to reply in case the Minister for Foreign Affairs should ask for suggestions as to the manner in which goods coming by tramp ships can be consigned direct from point of shipment to places north of Mukden. The Department does not feel bound to make any suggestion in regard to this matter.

If reductions in the rates for through shipments from places outside Manchuria cannot be made without in effect becoming preferential for Japanese goods, as seems, generally speaking, to be the case, then such reductions ought not to be made or should be limited to shipments over the South Manchuria Railway of goods already imported into Manchuria.

I am [etc.]

For the Secretary of State:
Frank L. Polk