The Minister in China ( Reinsch ) to the Acting Secretary of State
[Received June 9.]
Sir: In connection with your telegraphic instructions of March 19th, 6 p.m.91 relating to the elimination from the Hukuang Railway of all German interest, I have the honor to report as follows:
The matter was immediately taken up with my British and French colleagues. After consultation we sent, on March 25th, practically identical notes to the Foreign Office, (copy of my note herewith enclosed). The British Minister used the same first paragraph after which his note reads as follows:
“Your Excellency will, I feel sure, realize that as a result of the war the further co-operation of the British Group with the German group is out of the question and would render the raising of a loan on the British market a practical impossibility. The definite exclusion of the German group from all future interest in financing, constructing, and managing the Hukuang Railway becomes, therefore, a condition precedent to the supply of further funds by the British group.
I have much pleasure in adding that my Government will, in agreement with the Government[s] of the United States and France, be ready to use its best endeavours to see that the Chinese Government is furnished with sufficient funds to ensure the completion of the Hukuang Railways.”
A copy of the French Minister’s note is also enclosed.92
At the same time I took up the matter in personal conversation both with the Acting Minister of Foreign Affairs and the Minister of Communications. I took pains to impress upon the Ministers that the action was merely a corollary to the general declaration already made by the Chinese Government—that treaties with Germany had lapsed upon the declaration of war, and that our request was merely for an assurance that the Chinese Government would not revive these rights upon the conclusion of peace as far as the Hukuang Railways were concerned. Although we were given to understand that a favorable answer would be made, some time elapsed as the [Page 580] Government considered it necessary to get the opinion of the Paris delegation on the matter.
On April 11th, the Acting Minister assured me that a favorable answer would be sent to him from the Minister of Communications on the next day which he would communicate to me. He actually sent a communication on April 12th which, while it expressed general compliance, contained a clause that further favorable consideration would be given the matter. We did not consider this answer at all satisfactory and pressed for a more definite reply. On April 18, I was informed that the reply, as communicated to you herewith, would be given if satisfactory to us. We agreed that it was satisfactory but the formal document which is dated April 24th did not reach the Legations until April 25th.
With respect to the stipulation that operations in this matter are to be limited to Great Britain, France, and the United States, it did not seem to us feasible to insist upon a different statement of this subject. We feel that should we take exceptions to this stipulation grave suspicions would be aroused; and that should a plan for general international financing of all Government enterprises in China be adopted, the present enterprise could, without difficulty, be included therein. It was also felt by all of us that any disposal which it would be desirable in the interests of all the partners to make of this enterprise ultimately would not in the end fail of the consent of the Chinese Government.
I have [etc.]