The Minister in China ( Reinsch ) to the Acting Secretary of State

No. 2695

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.]

Paul S. Reinsch
[Enclosure 1]

The American Minister ( Reinsch ) to the Chinese Acting Minister of Foreign Affairs ( Ch’en Lu )

No. 923

Excellency: As it is a universal rule of international law that a declaration of war operates to cancel all treaties and agreements existing between the country declaring war and its enemy and that such contracts can only be revived after the conclusion of peace by special consent of the governments concerned; it has been understood by my Government that all the rights and interests held by German subjects under the Hukuang railway loan contract of May 20th, 1911, were cancelled by the declaration of war of the Chinese Government against that of Germany on August 14th, 1917. Acting under instructions from my Government I now have the honor to express the hope that Your Excellency in behalf of your Government [Page 581] will give me the assurance that these rights and interests will not be revived upon the conclusion of peace and that the Chinese Government will hold them in abeyance for such disposal as the remaining parties concerned in this agreement may desire to make of them in due time; and that therefore all German interest in the Hukuang railways will remain permanently eliminate[d]. As my Government considers this matter as particularly urgent, I have the honor to request the earliest possible reply.

In this connection I take great pleasure in being able to state that the American Government will use its good offices with the other Governments concerned, and also with the American bankers, with the end in view that funds for the completion of the Hukuang railways will be supplied to the Chinese Government. In this as in other respects the welfare of China will be my Government’s solicitous interest.

I avail myself [etc.]

Paul S. Reinsch
[Enclosure 2]

The Chinese Acting Minister of Foreign Affairs ( Ch’en Lu ) to the American Minister ( Reinsch )

No. 957

Sir: I have the honor to acknowledge the receipt of Your Excellency’s note regarding the Hukuang Railway. This was duly referred to the Ministry of Communications which now replies to the following effect:

The privileges of the Germans in connection with the Hukuang Railway Loan Agreement were all cancelled on the Declaration of War. Payment on principal and interest on the German bonds and advances has ceased, and they will be reckoned as security for indemnity due China for losses in the War. It is hoped that Great Britain, France and the United States will co-operate to the utmost of their ability to complete the Hukuang Railways. It must be stipulated, however, that operations are to be limited to Great Britain, France, and the United States, three powers. As to the connection of Germany with the Hukuang Railways, this Ministry declares that after the conclusion of peace the German interest will not be revived.

The above is communicated for the information of Your Excellency.

A necessary despatch, under instructions.

Seal of
Wai Chiao Pu
  1. Ante, p. 572.
  2. Not printed.