893.74/72: Telegram
The Secretary of State to the Minister in China ( Crane )
77. Department’s No. 65 February 14, 6 p.m.23
Danish Government informed this Government that the Danish protest was based on the ground that the contract is in conflict with the Agreement of 1913 between the Chinese Government on the one part and the Great Northern Telegraph Company and the Eastern Extension Australasia and China Telegraph Company on the other [Page 419] part,24 copies of which are on file in the Legation but may also be found in British and Foreign State Papers Volume 107, page 726. The specific clause on which the protest is based reads as follows: “or otherwise to establish telegraph connections which might create competition with or injure the interests of the existing lines belonging to China or to the cable companies”.
On February 21 Copenhagen was instructed to inform the Foreign Office that the Treaty obligations of the Chinese Government preclude it from creating any monopolies. The Chinese treaty of 1858 with the United States was cited and the pertinent clause quoted. The right of the Chinese Government to create in favor of third parties any such rights as would exclude American citizens from participating in any category of enterprises in China such as telegraphic communications was denied.
On the question of “natural monopoly” this Government expressed the opinion that whatever claim of this kind might originally have been urged in favor of the Danish cable interests such claim has lost any practical basis by reason of the fact that existing cable facilities between China and the United States are inadequate. For this reason this Government is not convinced that there exists any such practical necessity as might warrant its acquiescing in the effort to extend to wireless communication the claim to monopoly originally asserted by the Danish and certain other cable companies. This Government holds that such a claim to monopoly is fundamentally repugnant to the treaty rights and to the principle of the open door and it will not recognize any claim of contractual rights in favor of any party as valid or effective to exclude its nationals from any field of commercial or industrial activity in China.
You may read to the Wai Chiao Pu a paraphrase of this telegram and of the Department’s No. 65 of February 14, 6 p.m. in connection with the Department’s No. 75 February 23, 1 p.m. repeated to you from Tokyo.25