893.74/52: Telegram

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


443. With reference to the Department’s telegram no. 354 of December 3, the general outline of the proposed contract is as follows: Provision is made for one main overseas station and inland station at Shanghai as well as for five secondary stations at Peking, Canton, Hankow, Harbin and Shanghai. Further provision is made for a joint partnership between the Chinese Government and the Federal Telegraph Company, the Chinese Government to issue to the Federal Company approximately $3,000,000 worth of bonds for the company’s share. It is understood that the bankers backing the Federal Telegraph Company are members of the consortium group. There is to be a joint management of the system, with the Federal Telegraph Company to have actual control for ten years, profits to be equally divided. Large royalties are to accrue to the Federal Company during the succeeding decade. The bonds are to be secured by a first charge on the Chinese part of the profits and there will be additional security. An indication of the American Government’s approval will be asked of the Legation.

H.B.M. Legation is taking part in regular meetings between British Marconi and representatives of the Chinese Government to close [Page 406] an agreement for the expansion of existing Marconi wireless system, including also, according to reports, the additional supply of transoceanic communication. Should I indicate approval? Please instruct.