The Chargé in Japan ( Bell ) to the Secretary of State
[Received April 12—12:48 a.m.]
132. Department’s telegram 31, February 15, 7 p.m.,37 presented to Foreign Office February 17th. Department’s 34, February 23, 10  p.m.,38 presented February 27th. See also my 50 , March 5, 11 a.m.39
I have now received following reply marked “confidential” from Minister for Foreign Affairs dated April 9th:
“I have the honor to inform you that I have given careful study to the contents of the notes dated February 17 and 27, respectively, which you addressed to me under instructions of your Government relative to the contract recently entered into between the Department [Page 427] of Communications of the Chinese Government and the Federal Telegraph Company, and have also carefully considered the verbal statement you made on the same matter in the course of your conversation with Vice Minister Hanihara on March 4th.
In your note of February 17th you request me to notify you whether the protest lodged with the Chinese Government by the Japanese Minister at Peking against the contract with the Federal Telegraph Company has been made with the approval of the Japanese Government, and if so what the character of the rights is by virtue of which the protest is made. I beg to state in reply that the protest was made with the approval of this Government. As to the character of the rights on which the protest is based, an exposition was given in the note of Minister Obata addressed to the American Minister at Peking under the date of February 16th,40 with the contents of which I believe the American Government have been made fully acquainted. I have, however, caused a copy of the note to be enclosed herewith for your information.
The main points of your note of February 27th, and of your verbal statement to Mr. Hanihara on March 4th, are, as I understand, the following:
- That whereas the demand by the Japanese Minister at Peking for the cancellation of the contract is based on a letter, dated March 5th, 1918,40 supplementary to a contract between it and Chinese Government and the Mitsui Company, which contains a declaration that during the term of thirty years the Chinese Government shall not erect nor allow any party other than the Mitsui Company to erect a similar wireless station for communicating telegraphically with Europe and America, the creation of such a monopoly by the Chinese Government is in contravention of the purpose of the American-Chinese treaty of 1858, and the Chinese Government were not therefore competent to create any such exclusive right in favor of the Mitsui Company.
- That in view of the invariable concurrence of the Japanese Government with the American Government in the course of various discussions in regard to the questions of equality of commercial and industrial opportunity in China in depreciating [deprecating?] efforts on the part of a single nation to obtain any special rights or privileges in China which abridge the right of the subjects or citizens of other friendly states the American Government cannot doubt that the principle on which the view they take in the matter under discussion is based will be respected by the Japanese Government.
- That the American Government feel confident that in the face of the grave inadequacy of the existing facility for cable communications across the Pacific the Japanese Government will not desire to oppose a project for supplementing these facilities by the development of radio telegraphy.
In answer to the above consideration I beg to point out in the first place that in the letter of March 5, 1918, the Chinese Government did not create any exclusive right in favor of the Mitsui Company [Page 428] to do that which might otherwise have been simultaneously done by an indefinite number of parties acting each on their own account. In the nature of things the wireless installation could not be multiplied as a paying proposition; it is inconceivable that the successful operation of such enterprises can be secured if a variety of competing stations is multiplied by providing one for each “most favored” nation and what has been granted to the Mitsui Company in the letter is in the nature of a security necessary in order to protect the enterprise itself from failure. The case should be distinguished from the establishment of a monopoly over an extensive area in interests such as mining rights which might otherwise be capable of enjoyment by several parties simultaneously. To cite one out of many analogous cases to the present, it is a common practice in connection with a railroad loan to stipulate that no competing line shall be made; a stipulation absolutely necessary if the railroad is to pay its way and the loan to be secure.
Moreover, the construction of the means of communication within the territory of a country is purely a matter of domestic administration and the government of each country ought to be competent to regulate all plans regarding such matters according to their own uncontrolled discretion. That is a principle which as I understand your Government clearly recognize in its treaty of 1868 with China. In this connection the case of the Great Northern Telegraph Company, a Danish corporation, may be mentioned as a precedent. The Chinese Government have granted to this company up till the end of the year 1930 exclusive rights in connection with cable communications, et cetera, and the company has been exercising these rights in Pacific not considering these rights to be of that species which spontaneously inure to every government and its citizens or subjects entitled by treaty to most-favored-nation treatment. The Japanese Government duly recognized the position of the Great Northern Telegraph Company by concluding a special agreement with the company as well as with the Chinese Government when some time ago they laid a cable between Nagasaki and Shanghai. The Japanese Government are not aware that the American Government have made any protest against the position the Great Northern Telegraph Company has been accorded. They understood that this acquiescence on the part of your Government was due to its sharing our views of the character of the rights of the Danish company. It is therefore beyond our comprehension that the Far East government cannot elect to protect only against the Mitsui Company whose position is the same as that of the Great Northern Telegraph Company.42
I venture to believe that from the above the American Government will see that the question of the principle of equal opportunity and the Open Door cannot with pertinence be brought into play in connection with the letter of March 5, 1918, supplementary to the Mitsui [contract?].
As to the question of supplying the grave inadequacy of cable facilities across the Pacific there is no doubt in the view of the Japanese Government that so far as China is concerned the inadequacv of the facilities of communication with abroad will be removed [Page 429] should the Mitsui wireless station when completed enter into agreement with the Great Northern Telegraph Company for its use for such communication. If the Chinese Government had been of opinion that the Mitsui station was not quite sufficient to meet China’s needs for foreign communication they should, in view of their agreement with the Mitsui Company [have?] first approached the latter for their concurrence before they concluded the contract with the Federal Telegraph Company. The Japanese Government was therefore to learn that the Chinese Government without taking any such previous steps had entered into a provisional agreement with the Federal Telegraph Company for constructing great wireless stations. It was obviously impossible for the Japanese Government from the standpoint of protecting the acquired rights of a Japanese corporation to pass the matter by without protest and they accordingly instructed Minister Obata to convey a warning to the Chinese Government.
In regard to the doubt you expressed to Mr. Hanihara on March 4th as to why the letter of March 5th, 1918, was withheld at the time the Mitsui wireless contract was published in 1919, I beg to state that it was not due to any hesitation on the part of the Japanese Government to publish the letter but that it was because the interests of the parties to a contract like the present do not want the publication of all parts of the documents appertaining thereto.
I beg you, Monsieur le Chargé d’Affaires, etc.”
I assume you have received text of Obata’s note to Crane of February 16th, see Crane’s telegram 92, February 18, 6 p.m.43
Copy to Peking by mail.