File No. 893.77/1625
The British Ambassador to the Secretary of State
[Handed to the Secretary of State by the British Ambassador, September 8, 1917]
As the Department of State were informed in the British Embassy’s memorandum of August 30 last,4 the Department’s memorandum of August 24 in regard to the bearing of the “open door” policy in China on the execution of foreign contracts for the construction of railways was duly forwarded to London for the consideration of His Majesty’s Government.
A telegram has now been received from Mr. Secretary Balfour, instructing the British Embassy to inform the State Department that His Majesty’s Government have given the most careful consideration to the memorandum in question, and are of opinion that there is much force in the arguments put forward. It is clear that the only hope of maintaining tranquillity, and developing the economic resources of China, lies in the development of internal communications, and that the policy most suited to the requirements both of China herself and of the exporting countries which look upon her as a great potential market, would be the greatest possible extension of those internal communications throughout the country, by contractors of all nationalities.
In the view of His Majesty’s Government, it is a cause for regret that a régime whereunder specific areas are earmarked for the enterprise of specific countries has gradually taken the place of a régime of free railway construction. They are of opinion, however, that it would be a mistake not to recognize that such a transition has actually taken place. It is felt that during the last ten years the special position of Japan in Manchuria has been given tacit recognition, as well as the position of Germany in Shantung, the French declaration regarding Hainan and the provinces bordering on Tong-king, the Japanese declaration concerning Fukien, the prior rights of Russia north of the Great Wall, etc. It is true that, with the exception of the last, the formal recognition by His Majesty’s Government of special rights in the areas in question was neither sought nor given. In practice, however, British applicants for concessions on those areas have in no case been given support. The British Government [Page 196] have, in fact, recognized that the enterprise of their railway contractors is excluded from certain provinces and areas in China and, in view of such exclusion, it would be difficult for them to justify to their own people the throwing open of the only areas in which a privileged position is enjoyed by them to non-British enterprise.
In spite of these circumstances, His Majesty’s Government would be loath to adopt what might appear to be a “dog in the manger” policy towards the entry of American capital into Hupeh, were it not for the further consideration that, whereas the economic development of China is the sole object of British and American railways, those constructed by other nationalities have sometimes other than economic objects in view. It is felt that were the British Government to consent to an infringement by an American concession of their rights under the Vice Regal letter of 1905, this would lead to a third Power immediately demanding the grant of a similar privilege. The United States Government will doubtless agree that the construction with political and strategical objects, of a railway in the heart of the Yangtze Valley would conduce neither to the future integrity of China, nor to the advantage of international trade.
While the preceding paragraphs embody the views of His Majesty’s Government and the general question of railway construction in China, the British Embassy are instructed to explain the position with special regard to the concessions obtained by the Siems-Carey group.
The fact that the Hankow Viceroy’s letter of 1905 has never been published is not disputed. Its existence is, however, a matter of common knowledge. The American Legation at Peking have for long past possessed a copy of it, and this copy was recently shown to His Majesty’s Legation for purposes of verification. It must, moreover, be conceded, that other Siems-Carey concessions without exception infringe agreements granting prior rights to other Powers, agreements which have been published and which must be well known to the United States Minister at Peking.
The Department of State may possibly argue that by the recognition of all existing agreements and declarations with regard to railway concessions in China, American enterprise would be debarred from the construction of a number of remunerative lines, which the agreements and declarations in question cover, but which the nationals of the Powers concerned are unable or unwilling to construct. In the case of British concessions which might be regarded as included in this category, the railways involved are trunk lines of great importance, the failure of the British concessionaires to construct them being solely due to the financial burden which Great Britain has been called upon to bear in connection with the European war. It is clear that the lines in question should be constructed at the earliest possible moment in the interests of China and of foreign trade, and, in the event of funds being still available in the United States for such a purpose, His Majesty’s Government would be the first to welcome the cooperation of British and American interests in their construction
- Not printed.↩