861.77/2082b
Memorandum by the Department of State76
With a view to meeting the obvious need for a more economical operation of the Chinese Eastern Railway, to place the line on a sound financial basis, to restore normal traffic conditions, to provide [Page 565] a proper trusteeship for Russian interests, and to stabilize the situation in the Far East as far as may be possible, the Government of the United States is convinced that certain amendments to the Inter-Allied agreement of January, 1919,77 which now governs the operation of the line, have been made necessary by reason of changed conditions in the Railway Zone. It is believed by the Government of the United States that the following amendments to the above mentioned agreement Avould meet all the requirements of the new situation.
Omit paragraph (1) thus abolishing the Inter-Allied Committee, and substitute the following:
The general supervision of the Chinese Eastern Railway shall be under the joint control of the United States, England, France, Japan and China, such supervision to be vested exclusively in a Board which shall be known as the Technical Board and which shall consist of representatives of the United States, England, France, Japan, Russia and China. It is understood that the Board shall consist of railway experts of the nations above mentioned and that the technical and economic administration of the affairs of the railway shall be under the sole control of the Board.
- (a)
- Such powers as the present Technical Board possesses shall be preserved and continued under the new arrangement and the Board hereby created shall in addition have full control over the receipts and disbursements of the company’s revenues.
- (b)
- The Board shall also fix all tariffs and control all questions relating to personnel both of officers and employees, including the power of engaging or dismissing them. The Board may also, in its discretion, employ a Russian as General Manager, but with the understanding that he shall be under the authority of the Technical Board.
- (c)
- The President of the Technical Board shall be its responsible head and shall be entrusted with the administration of the duties of the Board as above set forth, and in the exercise of such duties he shall not be subject to control by a majority vote or otherwise by the members of the Board except in matters on which he may seek their advice. As far as may be possible full responsibility shall be vested in the President of the Board who shall actively administei its affairs. His tenure of office shall be subject to the decision of a majority of the Technical Board with the approval of the Governments who are parties to this agreement.
- (d)
- The Technical Board shall have authority to abrogate or to modify in any way in which it may deem advisable the so-called “Russian Laws” governing the technical details of the operation and maintenance of the railway.
- (e)
- No political activity whatever shall be countenanced in the administration of the affairs of the railway by the Board. Its duties [Page 566] and obligations shall be confined strictly to the administration, operation and financial control of the railway.
The foregoing substitute for paragraph (1) shall also take the place of paragraphs (2) (3) (4) and (5) of the agreement of January, 1919. The amended agreement will therefore read as set forth in the above substitute for paragraph (1).
Concerning the financial condition of the Chinese Eastern Railway it is stated that exclusive of the amounts due from various Red Cross and similar organizations, certain powers are now indebted to the railway for military transportation in an amount approximating six million dollars gold. If this sum could be collected and an additional amount of six million dollars gold placed to the credit of the Technical Board, sufficient working capital would then be available. According to information at hand at present the debts of the railway amount to approximately seven million dollars gold but it has been the hope that the amounts due for military transport would be available to extinguish the floating debt aside from whatever might be due the railway from the Russian Government. No definite figures on the last mentioned phase of the matter are available, however. The world-Avide business depression has resulted in the absence at present of any demand for soya beans, in consequence of which the revenue derived from the transportation of this product has seriously affected the railway. With a return to former normal conditions in the commercial and industrial world, and with prompt payment of current military transport bills, there is no valid reason to doubt the ability of the Chinese Eastern Railway, under proper management, and with the power to reorganize the railway, to make a profit over and above all of its legitimate charges and at the same time to bring about a substantial reduction in its present unduly high tariffs. This can be done only by operating the railway under the absolute orders of the Technical Board and with full executive authority vested in its President.
In submitting this revised plan for the operation of the road the Government of the United States expresses full confidence that the interested Governments will be willing that Mr. John F. Stevens, who has so ably filled the position of President of the Inter-Allied Technical Board since its inception, shall be selected as President of the Technical Board under the amended plan herein suggested.
- This memorandum served as the basis of a conversation between the British Ambassador and the Acting Secretary of State; see note of Mar. 24 to the British Ambassador, p. 573. Its substance was telegraphed on Jan. 20, 6 p.m., to the American Ambassador in Great Britain (no. 51), with instructions to repeat to the Ambassador in France as no. 53, and to the Chargé in Japan as no. 18, with instructions to repeat to the Minister in China as no. 33 (file nos. 861.77/1921b, a).↩
- See telegram, Dee. 27, 1918, 10 p.m., from the Ambassador in Japan, Foreign Relations, 1918, Russia, vol. iii, p. 301.↩