893.74/52: Telegram

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

[Paraphrase]

384. Referring to the Legation’s telegram no. 443 of December 16; according to Department’s feeling from facts in its possession Federal agreement does not entail bond issue for public subscription other than in the Chinese Republic. If consultation with representative of firm establishes correctness of this assumption, official American assent may be signified to the Government of the Republic. However, the Department is desirous that the Federal Company comprehend that the Department’s assent is given upon condition that the prospective agreement entails no infringement of the sphere of the consortium’s operations or embraces no rudiment of monopoly or curtailment of equal opportunity. The Department calls your attention to Legation’s telegram of September 23, 1918, 9 p.m. and despatches no. 2489 of January 28, 1919, and no. 2918 of July 30, 1919.2

Adee
  1. Telegrams and despatches not printed. These documents refer to a contract dated Oct. 20, 1917, between the Chinese Government and the Western Electric Co. and the Nippon Electric Co., in pursuance of which the China Electric Co., incorporated in Delaware, was established for the manufacture of electrical apparatus in China. Art. 11 (a) of the contract provided (file no. 893.72/15):

    “When the ‘Ministry’ requires machinery, apparatus or other materials in connection with the telephone and telegraph systems, the ‘Ministry’ shall place with the ‘China Company’ such orders which the ‘China Company’ is in a position to fill in the time to be agreed upon, provided, however, that the prices shall be reasonable and as favorable as those charged by other similar first-class manufacturers for similar materials of like quality; but this, of course, shall not be in the nature of unfair competition, that is, the prices shall be such as to provide a reasonable margin over the cost of labor, material, and the necessary expenses of doing business. All other orders which the ‘China Company’ is not in a position to fill at the time, may be placed elsewhere.”

    On Jan. 28, 1919, the Minister in China wrote to Mr. Clark H. Minor, representative of the China Electric Co., as follows (file no. 893.72/6):

    “To confirm recent conversations I desire to state that it will not be possible for the Legation to exercise its good offices in support of any rights in which you may claim to have a preference or priority in connection with furnishing telephone and telegraph materials to the Ministry of Communications.”