893.51/2557: Telegram
The Ambassador in Great Britain (Davis) to the Secretary of State
[Received November 26, 12.45 a.m.]
3447. My 2799, August 14, 7 p.m.;83 your 6147, November 1, 8 p.m.;84 and my 3428, November 22, 1 p.m.84 Following is text of [Page 503] memorandum dated November 12th [19th] by Foreign Office, [handed] to Japanese Ambassador November 19th [20th]:
“On September 1st His Excellency the Japanese Ambassador communicated to Earl Curzon of Kedleston85 the following memorandum:
The Japanese Government accept and confirm the resolutions adopted at the meeting of the representatives of the bankers groups of the United States, Great Britain, France, and Japan at Paris on the 11th and 12th May 1919, for the purpose of organizing an international consortium for financial business in China provided, however, that the acceptance and confirmation of the said resolutions shall not be held or construed to operate to the prejudice of the special rights and interests possessed by Japan in South Manchuria and Eastern Inner Mongolia.
At a subsequent interview with Lord Curzon, Viscount Chinda, in accordance with instructions received from his Government, defined what was meant by South Manchuria and Eastern Inner Mongolia.
His Majesty’s Government have now, after the most careful consideration of the Japanese contention, been forced to the conclusion that they could not justifiably accept the claims for the exclusion of Southern Manchuria and Eastern Inner Mongolia from the sphere of activity of the consortium if it were intended as a territorial claim.
As was pointed out to the Japanese Ambassador in the memorandum communicated to His Excellency on August 11, the admission of such a claim to the monopoly of commercial intercourse [interests] in a large geographical area of China would be a direct infringement of the fundamental idea underlying the creation of the consortium, which was to abolish spheres of interest and throw open the whole of China to the activities of an international financial combination.
Lord Curzon, however, cannot help thinking that the Japanese Government must be laboring under a misapprehension as to the scope and purpose of the consortium. It is not and never has been intended that under the guise of the consortium vested interests should be encroached upon. Article 1 [2] of the intergroup agreement of May 11 [12] last specifically lays down that agreements and options relating to industrial undertakings (including railways) upon which substantial progress has been made, need not be pooled. Indeed, the sphere of the new consortium is definitely limited to the financing of future undertakings in China and was never meant to extend to established industrial enterprises.
So far as Southern Manchuria is concerned, Lord Curzon recognizes that there are in that province important railways and other [industrial] enterprises which have been developed or are in course of development by Japanese enterprise, and which are clearly not within the sphere of the consortium.
Such is not, however, the case in Eastern Inner Mongolia where although options for railways have been granted to Japan, no work has yet been begun. Indeed, such a claim as is put forward by the Japanese Government in regard to Eastern Inner Mongolia, [Page 504] amounting to the reservation of an exclusive interest in a large area whose southern boundaries practically embrace Peking and encroach upon the Province of Chihli, cannot be reconciled with the maintenance of the independence and territorial integrity of China, which Japan has so often pledged herself to observe.
It is confidently hoped, therefore, that when the question is viewed in this light the Japanese Government will see no objection to modify their present attitude as regards both South Manchuria and Inner Mongolia, and will authorize the Japanese banking group to enter into the new consortium on the same basis as the other groups, that is, without any special reservations.
The Japanese Government will also, no doubt, recognize the urgent need of promptness in dealing with the situation in view of the disastrous situation, on the verge of which China appears now to find herself.”
Repeated to American Embassy, Paris, as 758, November 25, 6 p.m.