Papers Relating to the Foreign Relations of the United States, 1920, Volume I

893.51/2695

The Japanese Embassy to the Department of State

Memorandum

The Japanese Government have given their serious consideration to the Memorandum of the United States Government of the 28th of October last relating to the formation of a new Consortium.⁵⁵

The United States Government appears to be under the impression that the proposal of the Japanese Government in regard to South Manchuria and Eastern Inner Mongolia amounts either to exclusive political pretentions or to the establishment of a so-called sphere of interest.

The Japanese Government desire to set forth once again their views frankly on the main purpose of their proposal and to invite further consideration on the part of the United States Government on this subject.

From the nature of the case, the regions of South Manchuria and Eastern Inner Mongolia which are contiguous to Korea stand in very close and special relation to Japan’s national defense and her economic existence. Enterprises launched forth in these regions, therefore, often involve questions vital to the safety of the country. This is why Japan has special interest in these regions and has established there special rights of various kinds.

The Japanese Government are under no misapprehension or misgiving as to the purpose of the organization of the Consortium, and are glad to co-operate under such an arrangement with the Powers concerned for the promotion of the general welfare in China. But, as is suggested in the proposed Consortium, merely out of business considerations to throw open to the common activities of an international financial combination even those enterprises in the regions of South Manchuria and Eastern Inner Mongolia which vitally affect the economic existence and national defense of Japan would be no safe way of providing for the national peace and security, and for this reason, it would hardly meet with the approval of public opinion in Japan. These considerations were fully set forth by Mr. Debuchi, the then Chargé d’Affaires of Japan, in his interview with the Third Assistant Secretary on the 27th of August last year.⁵⁶

Furthermore, the recent development of the Russian situation, exercising as it does an unwholesome influence upon the Far East, is a matter of grave concern to Japan. In fact, the conditions in Siberia, which have been developing with alarming precipitancy of late, are by no means far from giving rise to the most serious situation, which may at any time take a turn threatening the safety of Japan and the peace of the Far East, and ultimately place entire Eastern Asia at the mercy of the sinister activities of extremist forces. Having regard to these signals of the imminent character of the situation, the Japanese Government all the more keenly feel the need of adopting measures calculated to avert any such danger in the interest of the Far East as well as of Japan. Now South Manchuria and Mongolia are the gate[s] by which these direful influences may effect their penetration into Japan and the Far East to the instant menace of their security.

The Japanese Government are convinced that, having regard to the vital interests which Japan, as distinct from the other Powers, has in the regions of South Manchuria and Mongolia, the United States Government will appreciate the circumstances which compelled the Japanese Government to make a special and legitimate reservation indispensable to the existence of the State and its people.

In short, the present proposal of the Japanese Government in regard to Manchuria and Mongolia is based, as already explained, on the paramount importance of the economic existence and national security of the country, coupled with a due regard for the general peace of the Far East—considerations which have been strengthened by the recent development of the situation. Consequently the Japanese Government are prepared to co-operate with the financiers of the Powers concerned in Manchuria and Mongolia so long as the main purpose of their proposal as above enunciated remains respected. It would be needless to say that that proposal was prompted by no desire of making any territorial demarcation involving the idea of economic monopoly or of asserting any exclusive political pretensions or of affirming a doctrine of any far-reaching sphere of interest in disregard of the legitimate national aspirations of China, as well as of the interests possessed there by the Powers concerned. It is confidently hoped that the United States Government would submit these points to their serious consideration.

The Japanese Government are gratified that the United States Government acknowledges in its memorandum now under review the exclusion from the scope of the common activities of the new Consortium, not only of those Japanese undertakings in Manchuria and Eastern Inner Mongolia which are already developed and constitute vested proprietary interests, but also of the existing options in connection with railways already in operation (for instance the proposed continuation to Taonan of the Ssupingkai-Chengchiatun Kailway and to Hueining of the Kirin-Changchun Railway) and makes it abundantly clear that Japan’s legitimate rights and interests are in no case to be jeopardized. Having regard to the considerations of assuring the national security referred to above, it is expected that the principal instances of Japan’s legitimate undertakings, as enumerated in the attachéd statement, will be excluded from the scope of the common activities of the new Consortium. The British Foreign Minister invited Viscount Chinda on the 19th of November last year,⁵⁶ if there is any fear that any project launched under the aegis of the Consortium might threaten the strategic security of Japan, to guard against this danger by proposing a formula to meet the case. It is believed that the views of the British Government in this respect are shared by the United States Government.

Accordingly, the Japanese Government, while authorizing the Japanese bankers’ group to enter the proposed Consortium on the same footing as the bankers’ groups of the other Powers concerned, venture to propose to achieve the settlement of the matter at issue by exchanging between the Members concerned a note embodying the sense of the formula hereto attached.

formula

The Japanese Government accept and confirm the resolutions⁵⁷ passed at the conference of the representatives of the banking groups of the United States, Great Britain, France and Japan which met in Paris on May 11th and 12th, 1919, for the purpose of organizing a new Consortium. In matters, however, relating to loans affecting South Manchuria and Eastern Inner Mongolia which in their opinion are calculated to create a serious impediment to the security of the economic life and national defense of. Japan, the Japanese Government reserve the right to take the necessary steps to guarantee such security.

Washington , March 2, 1920.

[Annex]

Statement of Japanese Undertakings in Manchuria and Mongolia to be Excluded from the Scope of the Consortium

1. The South Manchuria Railway and its branches, together with the mines which are subsidiary to the railway, are unaffected by the scope of the common activities of the new Consortium.

2. The construction of the Kirin-Changchun Railway, Shinminfu-Mukden Railway and Ssupingkai-Chengchiatun Railway has been completed, and their operation has already been commenced. They fall therefore within the category of those enterprises which according to Article 2 of the proposed inter-group Agreement, have already made substantial progress, and are outside the scope of the common activities of the new Consortium.

3. The Kirin-Hueining Railway, the Chengchiatun-Taonanfu Railway, the Changchun-Taonanfu Railway, the Kaiyuan-Kirin Railway, the Taonanfu-Jehol Railway and the railway connecting a point in the Taonanfu-Jehol Railway with a seaport are branch or feeding lines of the South Manchuria Railway. Moreover, having regard to the fact that, as stated in the Memorandum dated March 2, these lines together with the South Manchuria Railway do not only bear a most important relation to the national defense of Japan, but also constitute a powerful factor in the maintenance of peace and order in the Far East; and also in view of the fact that, as an extension of the railways already in operation as set forth in the memorandum of the United States Government, these lines form the subject of legitimate rights of Japan, it is expected that they will be placed outside the scope of the common activities of the new Consortium. It is not unlikely, however, that in case of any loan being floated in future in connection with these railways, the European and American markets will be invited to subscribe to it.

Washington, March 2, 1920.

55. Foreign Relations, 1919, vol. i, p. 497.
56. Memorandum of conversation not printed.
56. See telegram no. 3447, Nov. 25, 1919, from the Ambassador in Great Britain, Foreign Relations, 1919, vol. i, p. 502.
57. See telegram no. 413, May 20, 1919, from the Ambassador in France, ibid., p. 435.