893.51/2405
The Department of State to the Japanese Embassy
Memorandum
The Government of the United States has received and carefully considered the memorandum dated August 27, 1919,77 in which the Imperial Japanese Embassy advised it that the Japanese Government accepted and confirmed the resolution adopted at the meeting of the representatives of the bankers groups of the United States, Great Britain, France and Japan at Paris on May 11 and 12, 1919, for the purpose of organizing an international consortium for financial business in China, subject, however, to the following proviso:
“that the acceptance and confirmation of the said resolution shall not be held or construed to operate to the prejudice of the special [Page 498] rights and interests possessed by Japan in South Manchuria and Eastern Inner Mongolia.”
This Government, after an earnest study of the proposal thus made, reluctantly finds itself unable to assent to the proviso in reference to South Manchuria and Eastern Inner Mongolia: it can only regard the reservation in the form proposed as an intermixture of exclusive political pretensions in a project which all the other interested Governments and groups have treated in a liberal and self-denying spirit and with the purpose of eliminating so far as possible such disturbing and complicating political motives; and it considers that from the viewpoint, either of the legitimate national feeling of China or of the interests of the Powers in China it would be a calamity if the adoption of the consortium were to carry with it the recognition of a doctrine of spheres of interest more advanced and far-reaching than was ever applied to Chinese territory even in the period when the break-up of the Empire appeared imminent.
It can only be assumed that in taking its present position the Japanese Government has misapprehended the purposes of the consortium and assumed that it is the intention of the other Governments to encroach upon the existing vested Japanese interests in the region indicated. That such is not the intention may be seen from the wording of the inter-group agreement of May 11th [12th] which in Article I [II] specifies that only those industrial undertakings are to be pooled upon which substantial progress has not been made. This wording plainly excludes those enterprises which are already developed and thus constitute vested proprietary interests (such as the South Manchuria and Ssupingkai-Chengchiatun Railways, the Fushun collieries, et cetera) and may fairly be interpreted to exclude likewise the existing options for the extension of railways already in operation (for instance the proposed continuation to Taonan of the Ssupingkai-Chengchiatun Railway and to Hueining (Hoir-yong) of the Kirin-Changchun Railway.) If Japan’s reservation is urged with a view solely to the protection of existing rights and interests, it would seem that all legitimate interests would be conserved if only it were made indisputably clear that there is no intention on the part of the consortium to encroach on established industrial enterprises or to expect the pooling of existing Japanese options for the continuation thereof: and this Government feels that the Japanese Government should be amply content with the understanding that certain specific enterprises are exempt. This Government can not accept a geographical reservation which could not but lend itself to implications which are foreign to the purposes of the consortium. But it is still hopeful that the Japanese Government [Page 499] may find it possible to authorize its banking group to enter the proposed consortium with full assurance that no legitimate Japanese rights or interests would thereby be jeopardized.