The Minister in Denmark (Grew) to the Secretary of State

No. 207

Sir: With reference to this Legation’s telegram No. 31 of March 30th, 5 [10] p.m.,32 transmitting a slightly abbreviated paraphrase of a note received from the Minister for Foreign Affairs relative to the contract made between the Federal Telegraph Company and the Chinese Government for the construction and operation of wireless stations in China, I have the honor to transmit herewith a copy of the text of the note in question, as well as a copy of my note of February 23rd, to the Minister for Foreign Affairs,33 to which it refers.

I have [etc.]

J. C. Grew

The Danish Minister for Foreign Affairs (Scavenius) to the American Minister (Grew)

Monsieur le Ministre: In your note of February 23rd no. 71 concerning a protest lodged with the Chinese Government by the Danish Legation at Peking against a contract signed by the said Government [Page 423] and the American Corporation, The Federal Telegraph Company for the construction and operation of wireless stations in China, you have been good enough, while referring to your earlier note no. 68 of February 16th,34 and under instruction of your Government, to set forth the reasons why the Government of the United States of America consider the said Corporation entitled to enter into such an agreement with the Chinese Government.

The Danish Government are not able to acknowledge that the arguments put forward are well founded, and take the liberty to make the following remarks on the subject.

In the first paragraph of your note you state that the Chinese Government are precluded by treaty obligations from creating any monopoly. The Danish Government are, however, unaware of any treaty-engagement contracted by the Chinese Government which would prevent the said Government from entering into the agreement in question with the Great Northern Telegraph Company Ltd. Moreover there is in this case not a question of a monopoly in the usual sense of the word, but of an agreement of a specific nature. Generally the right to construct and operate wireless stations cannot be claimed by private individuals or companies, but is in several countries, such as for instance in Denmark, reserved for the State. To construct and operate telegraph-connections is an enterprise which under modern conditions form a natural task for the State, just like the mail distribution. For that reason one cannot consider a restriction of the admission for private individuals to carry on such enterprise as expressive of a movement towards monopoly in the usual sense of the word.

The State is justly interested in seeing that not everybody should be able to establish telegraph-connections with foreign countries from its territory. This view seems to gain ground also in the United States of America, at least in respect to the landing of submarine cables and probably also in respect to wireless telegraphy, compare “Hearings before a sub-committee of the committee on interstate commerce United States Senate, 66 Congress, 3rd Session on p. 4301 (a Bill to prevent the unauthorized landing of submarine cables in the United States) Washington 1921.”

The Chinese Government instead of laying down the necessary cables etc., themselves have preferred, for practical reasons, to make an agreement on the matter with certain companies, which quite naturally must involve an exclusive privilege for these companies.

This procedure on the part of the Chinese Government can, however, in no way be adduced by other private individuals or companies as the basis for a plea that such activity therefore can be freely exercised by everybody.

[Page 424]

In your note you furthermore specially refer to the treaty of 1858 between the United States and China, which treaty giving expression to the general most-favoured-nation principle lays down that if the Chinese Government should grant to any nation or to 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 offices, merchants and citizens.

According to the view of the Danish Government a most-favourednation clause, however, only concerns the legal position of the citizens in general, while it cannot be put forward to set aside an actual agreement based on civil law between the Government and a private company. This clause might have been adduced by the American Government if the Chinese Government had granted to Danish citizens in general certain rights which do not belong to American citizens. This is however not the case. The actual agreement entered into between the Chinese Government and the Great Northern Telegraph Company Ltd. does not grant to the Danish State or to Danish citizens as such any further rights than such as also belong to other states or their citizens.

From the opposite point of view the Chinese Government would be precluded from making any agreement based upon civil law with the citizens of another country, because the citizens of a mostfavoured-nation in this case could request that such an agreement should be set aside, and then demand for themselves to enter as contracting parties upon the same terms.

In your note of February 23rd in fine reference is made to the purely contractual character of the rights of the Great Northern Telegraph Company. It would appear herefrom that the American Government themselves recognize that in the present case there is a question not of a general concession of a constitutional or an international nature but exclusively of contractual rights.

I furthermore beg to observe that it cannot be admitted by the Danish Government that the insufficiency of the telegraphic connection between the United States of America and China can be attributed to the Great Northern Telegraph Company Ltd. or to the rights held by the said company in China, since this connection is owned by the American Company, Commercial Pacific Cable Company, which already has landed one cable in China, and would be free to land another cable there whenever it should so desire. At any rate such considerations of a practical nature cannot in the opinion of the Danish Government be adduced in order to set aside a right expressly agreed upon.

[Page 425]

In your note it is furthermore stated that the agreement concluded between the Chinese Government and the Great Northern Telegraph Company Ltd., does not concern wireless telegraphy. This, however, is not consistent with the Danish Government’s comprehension of the substance of the agreement. It is expressly stipulated in the additional agreement of December 22nd, 1913, a copy of which I already have had the honour to forward to you,35 not only that till the 31st of December 1930, no other party will be allowed without the consent of both the said parties, to land telegraph-cables on the coast of China and islands belonging thereto, or to work such cables in connection with the Chinese lines, but also that till the date mentioned nobody will be allowed, without the consent of the parties, “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.”

The Chinese Government have moreover at several occasions acknowledged that China is not entitled to grant concessions for wireless connections with other countries to anybody without first having obtained the consent of the companies in question in accordance with the agreements concluded between China and the companies.

In your note it is also said that the existing state of affairs is contrary to the “open-door” principle. In the opinion of the Danish Government this principle however only entails that China cannot close her frontiers to every trading intercourse with other states nor permit one single or some individual states, with exclusion of other states, to trade with her. The open-door principle is one of an international or a political nature and it cannot be adduced as a means to rescind agreements based upon civil law.

Finally it is stated in the last paragraph of your note that contractual rights cannot be a hindrance to the utilization of any field of industrial or commercial activity in China by the citizens of another country. The Danish Government are not aware on what considerations this view is based. They are of opinion that industrial and commercial enterprises cannot obtain any sound development, unless rights already acquired are held in respect. In this connection I take the liberty to refer to the fact that the rights of the Great Northern Telegraph Company Ltd. in China have been generally known, without either the American Government or any other Government having offered any objection to them on the basis of the principles now put forward by the American Government.

Requesting you to be so good as to bring the above considerations to the knowledge of your Government, I avail myself [etc.]

Harald Scavenius
  1. Not printed.
  2. Not printed; see telegram no. 7, Feb. 21, to the Minister in Denmark, p. 416.
  3. See telegram from the Minister in Denmark, no. 17, Feb. 17, p. 414.
  4. See telegram no. 17, Feb. 17, from the Minister in Denmark, p. 414.