893.51/2707: Telegram
The Ambassador in Japan (Morris) to the Acting Secretary of State
90. The unacceptable nature of the statement which Japan has presented and upon which I commented in my no. 84 of March 8, 2 p.m., is merely an illustration of the inherent dangers and troubles which would be found in any formula which sought to give recognition in a general way to any Japanese interests in China of a strategic or economic nature. Statements of this kind by governments are likely to assume features of a political sort. Aside from ambitions for territory and political advantage which doubtless are held by the people of Japan, nevertheless Lamont and I share the view that the strong, fundamental, tenacious purpose of the Japanese to safeguard the lines of communication to raw materials and foodstuffs on the Asian mainland which they consider necessary to their industrial and national life is to a certain extent justifiable and reasonable. We must, on that account, somehow give consideration to this feeling. Unless we do so the likelihood of solving the existing problems is scant.
Lamont and I are sorry that the officials of Japan do not have the same trust which the members of their group of bankers have that our group and the others connected with the consortium will in the future show fairness and reason. We think that the principal [Page 509] Japanese business and financial leaders are sincerely anxious to join the combination for loans to China without reservation and with a friendly attitude. There is, however, a feeling of suspicion and distrust among strong elements in the Government. In addition, it is necessary to placate and give heed to this public sentiment to which I have already referred. These factors are sufficiently strong, I think, to prevent the success of the association for Chinese loans if we are unable to invent a method which will lessen the power of their hostility by reassuring them without our yielding the substance. Lamont has proposed to cope with this condition by exchanging letters between the groups of bankers in Japan and in the United States which shall attempt to set forth the position of the American and European associations of bankers in regard to interests of an economic nature which Japan has in Mongolia and Manchuria. The letters would define precisely what enterprises would be included in the field of the financial combination and what would not be. It appears that the suggestion is singularly fortunate in that it recognizes some economic conditions as they are without making possible an interpretation giving undefined claims as to territory or an indefinite zone of business interest as might be the case were it an official act of the Government.
For this reason Lamont and I have drawn up and present to you for your study and candid opinion the notes which follow—the admission by the financial combination of the Japanese claims of a business nature being made in the reply which it is suggested that our banking association will make.72
Suggested letter from the Japanese banking group to American banking group.
“You will recall that [upon the] organization of [the] consortium at Paris May 11th and 12th last, the representatives of the Japanese, American, British and French banking groups attached their signatures to the resolutions73 and agreement74 subject to the approval of their respective Government[s]. You will further recall that, upon the instructions of the Japanese Government, our banking group later addressed you a letter, stating that our acceptance of the consortium agreement was made with certain reservations with respect to portions of the Provinces of Manchuria and Mongolia.75
We have now the honor to inform you that certain points in the agreement and in the operations of the proposed consortium, hitherto somewhat obscure, having been cleared up to the satisfaction of our Government and of ourselves, we are able now to announce [Page 510] our acceptance of the consortium agreed [upon] without reservation, and at the same time to express our hearty concurrence with the general ideas and objects of the consortium in respect to China.
Very truly yours”.
Proposed acknowledgment [of] Japanese letter by American group.
“Dear Sirs: We beg to acknowledge with thanks the receipt of your communication of blank date informing us in behalf of the Japanese banking group that (under the instructions of your Government) you have now withdrawn the reservations hitherto made with respect to certain portions of Manchuria and Mongolia and have adopted, in association with the banking groups of America, Great Britain and France and on like terms with them the agreement for the establishment of a new consortium in respect to China.
We are happy to note that certain points that had hitherto been somewhat obscure to your group or your Government have now been made plain and we trust with slight modifications that the way is clear for the consortium to undertake operations.
Please permit us to take this opportunity to say to you in behalf of the American banking group that we clearly recognize the economic views which, as you have explained them to us, you hold with reference to Manchuria and Mongolia. We understand for instance that, because of the fact that in general the islands of Japan may in the future be unable to supply sufficient food for your growing population, it may be necessary for you to look to some source of food supply such as those naturally supplied by Manchuria.
We realize further that for your wool you may in certain contingencies be dependent in large measure on supply from Mongolia, that for other raw materials necessary for manufacturing you may also be dependent upon sources of supply from Manchuria and Mongolia.
Recognizing as we do these facts pertaining to your economic life we may say that we shall view with satisfaction Japan’s economic efforts to increase the output of such commodities as we describe; for we believe that by such increased output not only will Japan’s population and industries be supplied but that there should result a real and favorable economic development in certain portions of the provinces of Manchuria and Mongolia.
We recognize further that the development of railways open some relation to Korea’s strategic position. For that reason we are free to say that it would be quite contrary to the ideas of the American banking group that in Southern Manchuria and in Eastern Inner Mongolia the consortium should undertake the construction of new railway lines without the unanimous [consent] of all four banking groups members of the consortium. In the event that the other members of the consortium should decline to proceed with any project, [in] that territory, then the Japanese group would be free to proceed with it for its own account and at its own expense [, unless Japan shall have voted in the negative].
As some questions have arisen during our discussions in reference to specific railway enterprises actually begun or contemplated in [Page 511] Manchuria and Mongolia, we desire to state definitely that the South Manchurian Railway and its branches together with the mines which are subsidiary to the railway are clearly unaffected by the terms of the consortium. This statement also applies to the Kirin-Huining Railway, the Chengchiatun-Taonanfu Railway and the Kaiyuan-Kirin Railway which are recognized as in effect branch lines of the South Manchurian system. But we have a message from you that the projected Taonanfu-Jehol Railway and any railway connecting a point on the Taonanfu-Jehol Railway with a seaport are clearly not branch lines of the South Manchurian Railway and should therefore be included within the terms of the consortium agreement.
It is also understood that the Kirin-Changchung, Hsinminfu-Mukden and Ssupingkai-Chengchiatun Railways which have been completed and are already in operation fall within the category of those enterprises which according to article 2 of our inter-group agreement are outside the scope of the joint activities of the new consortium.
While this letter is, in the first instance, written in behalf of the American banking group, we are pleased to state for your information that we are transmitting it to you only after submission to the British and to the French banking groups; also [to] the Governments of the United States and of Great Britain and France.
Pray be good enough to present our regards to your colleagues in the Japanese banking group and our best wishes for the success of the joint four-power undertaking.”
Lamont intends that these notes shall be used as a foundation for his negotiations with business and financial leaders in this country. Intimations have, indeed, been made to him by a man connected with finance that the bankers would probably look upon some means of this nature as fair and acceptable enough to justify them in strongly recommending to the Japanese officials that they adopt such a solution. Although he feels sure that the banking associations of Great Britain, France, and the United States would find some exchange of letters of this kind acceptable, Lamont does not feel that he should continue with this plan unless he is assured that the American Government gives its thorough approbation. He thinks that you will want to send this plan to our bankers if you find it acceptable, awaiting further developments, however, before taking into confidence in this matter the banking associations in France and Great Britain.
In case these letters are satisfactory to the combination of bankers in this country and are presented by them to their Government for its acceptance, I trust that you will give me authority to urge their approval in the conversations which will take place, I think, after the United States has objected to the formal statement suggested on March 2 in the Japanese memorandum.76
- Telegram in three sections.↩
- Texts of the two draft letters which follow not paraphrased.↩
- See telegram no. 413, May 20, 1919, from the Ambassador in France, Foreign Relations, 1919, vol. i, p. 435.↩
- See note of June 5, 1919, to the British Chargé, ibid., p. 439.↩
- See telegram no. 2324, June 18, 1919, from the Ambassador in Great Britain, ibid., p. 451.↩
- Ante, p. 500.↩