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

893.51/2754

The Japanese Embassy to the Department of State ⁹⁸

[A.] The Japanese Government have received the Memorandum of the United States Government dated March 16th, 1920,⁹⁹ giving frank expression to its views again upon the proposal of Japan relative to the organization of a new Consortium for loans to China, and have taken it into their careful consideration.

[B.] The Japanese Government are happy to express the hearty gratification with which they have noted that the United States Government is fully appreciative of and even sympathetic with the principle embodied in the formula proposed by the Japanese Government. The United States Government however is inclined to think that the terms and character of the formula may be taken to indicate a continued desire on the part of Japan to exclude the other Powers from participation in the development of important parts of China, and that it is likely to create unnecessary misapprehension. The Memorandum adds that the United States Government is therefore hopeful that the Japanese Government will withdraw their proposal for the explicit guarantee embodied in the formula in question. The Japanese Government, while acknowledging that this suggestion of the United States is offered in the most friendly spirit, would like to state that they made the proposal now under review only because they felt it useful and important to do so in order to make clear the particular position which Japan occupies through the facts of territorial propinquity and of her special vested rights.

[C.] They never thought of any possibility of the formula giving rise to any such misapprehension or misconstruction as is pointed out by the United States Government. They are glad, however, to note that it is not so much to the principle of their proposal as to its form that the United States Government takes exception. Assurance is given in the Memorandum of the United States Government that the right of national self-preservation, which forms the basis of the guarantee required by Japan in order to assure the security of her national defence and the economic existence of her people, is not only one of universal acceptance but one of which the recognition is implied in the terms of the notes exchanged between Secretary Lansing and Viscount Ishii, so that the new Consortium would in no case embark upon any activities directed against the national defence and the economic existence of Japan and so that the Powers associated in the Consortium would refuse their countenance to any enterprise inimical to the vital interests of Japan. Accordingly, after deliberate consideration, the Japanese Government relying upon that assurance of the United States, have come to the decision to accept most willingly the suggestion of the United States Government and to forego their request for the acceptance of the proposed formula on the part of the other interested Powers, on condition that these Powers agree to the above understanding as formulated by the United States Government.

[D.] As to the railway and other enterprises which Japan naturally expects will be excluded from the scope of the common activities of the new Consortium, the United States Government expresses a doubt as to whether it is essential for Japan alone to construct and control such a railway as the Taonanfu-Jehol line. This railway, together with the line connecting a point thereon with a seaport, was projected with the strategic object of making it a means of common defence on the part of China and Japan against foreign invasion coming from the direction of Ourga, quite apart from the further object of facilitating development of the districts through which these lines run. It is, therefore, a matter of great regret and surprise to the Japanese Government that there exists the misunderstanding that these railways will eventually prove a menace to Peking. It is confidently hoped that Japan’s position in this connection may be fully appreciated by the United States Government. The Japanese Government, mindful as they are of the common interests of the Powers, have no objection to a scheme of making these two railways a joint enterprise of the new Consortium, but having regard to the particular relation in which Japan stands to these railways, it is hoped that the United States Government will lend their full support to the following two propositions.

(1) In the event of the new Consortium projecting in future a scheme of extending the Taonanfu-Jehol railway to the north with a view to connection with the Eastern Chinese Railway, the assent of the Japanese Government thereto must be obtained beforehand through the Japanese group, inasmuch as such an extension being tantamount to a renewal of the so-called Chinchou-Aigun railway scheme against which a protest was lodged by Japan when the question was motioned [mooted?] some years ago, is calculated to have a serious effect upon the South Manchuria Railway.

(2) In consideration of the particular desire of Japan that these two lines should be built as speedily as possible, the Japanese group, after due consultation with the other groups, may be permitted to undertake their construction single-handed in the event of the other three Powers associated in the new Consortium being reluctant to finance it. In that case, having regard to the fact that these railways must cross the Peking-Mukden railway at a certain point, the American group will give their support to the overture which the Japanese financiers will make to their British colleagues with a view to perfecting the junction of these lines.

[E.] As regards concrete questions as to which of the options that Japan possesses at present in Manchuria and Mongolia in respect to railways, is to be excluded, in accordance with the understanding reached between the Governments of the United States and Japan, from the scope of the common activities of the new Consortium, the Japanese Government entirely share the view of the United States Government that a settlement satisfactory to both parties will be arrived at through the discussion now in progress in Tokio between Mr. Lamont and the representatives of the Japanese banking group. In this belief, the representatives of the Japanese banking group are authorized to proceed with the discussion with Mr. Lamont with the object of arriving at a settlement of questions of this nature.

Washington , April 3, 1920 .

98. The inserted lettering of paragraphs follows the scheme employed, for purposes of comment, by the Secretary in his telegram no. 244, Apr. 3, to the Ambassador in Great Britain, infra.
99. Ante, p. 512.