The Secretary of State to the Minister in Denmark (Grew)
7. In reference to the Legation’s telegram no. 17 of February 17, the Minister is instructed to inform the Danish Minister for Foreign Affairs that the Chinese Government is precluded by its treaty obligations from establishing any monopolies. The Chinese Government explicitly contracts furthermore, in its treaty of 1858 with the United States, that should it ever in any instance
“grant to any nation, or the merchants or citizens of any nation, any right, privilege, or favour connected either with navigation, commerce, political or other intercourse which is not conferred by this treaty, such right, privilege, and favour shall at once freely enure to the benefit of the United States, its public officers, merchants, and citizens.”
The American Government holds, in view of these provisions, that the Chinese Government is not competent to create for the benefit of third parties any rights of such a nature as would deprive American citizens of the right to take part with the Chinese Government in any category of enterprises such as telegraphic communications. Whatever claim to a “natural monopoly” may in the beginning have been [Page 417] put forward on behalf of Danish cable interests, it is evident that any practical basis for such a claim has disappeared on account of the fact that the cable facilities now in existence have become definitely inadequate to the needs of the telegraphic commerce between the United States and China. The American Government can not be convinced, in view of that proved inadequacy, that any such practical necessity exists as to warrant this Government in acquiescing in the extension to wireless communication of the claim to monopoly asserted in the beginning by Danish and certain other cable companies. Although the American Government regrets to find that the interests of Americans are in conflict with those of Danish subjects, it must in frankness make clear its position that such a claim to monopoly as regards any service of the Chinese Government is, in the American Government’s opinion, fundamentally in opposition to treaty rights and to the open door principle; and the American Government must also make clear that it is not ready to recognize as valid, or effective to exclude American nationals from any field of industry or commercial activity in China, any claim of contractual rights in favor of any party.