893.51/3354: Telegram

The Secretary of State to the Minister in China ( Crane )

149. Referring to your telegram No. 143, April 5, 2 p.m., and Commercial Attache’s letter to Director of Bureau of Foreign and Domestic Commerce, March 29,57 concerning purchases of railway equipment.

Purchasing agencies and national preference in purchasing of materials as provided in contracts for construction of existing railways are of course unaffected by Consortium Agreement, which relates only to future loan business and which therefore affects existing lines only in so far as new financing may afford occasion for Consortium activities. It is feared confusion on this point may have obscured issues involved in the apparent effort of British controlled lines to exclude American equipment. You will therefore be careful [Page 367] to avoid construing Consortium Agreement as invalidating provisions of contracts which are not within the scope of the Consortium.

You will, however, with the assistance of the Commercial Attache continue to insist upon the right of American manufacturers to equality of treatment subject only to such legitimate rights of national preference as may have been established by the loan contracts under which the several existing lines were built; and will protest vigorously to the Chinese Government against any interpretation of these agreements which would exclude American manufacturers from competition.

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  1. Latter not printed.