The Secretary of State to the Ambassador in Great Britain ( Davis )79
97. The Department has information indicating that large sums of money owed by the Japanese Government to the Chinese Eastern Railway for transportation are being withheld by the Japanese on the plea that Czech, French, and Polish accounts have not yet been paid. It also seems that the Chinese Eastern is being pressed by [Page 568] Japanese interests for large payments on account of coal which the Fushun mines have supplied. The railway is confronted with the immediate danger of a financial crisis due to these conditions and to the decrease in freight revenues which has resulted from the depressed market for the products of Manchuria. Under these circumstances there is a possibility that on the ground of military exigency occasion may be taken by some of the military forces operating in Manchuria to take possession of the railway and thus endanger existing arrangements for joint control by the Allies.
When the British Ambassador returns here, probably February 23, the Department hopes to confer with him on this matter. The Department wishes that meanwhile you call the attention of the Foreign Office to the foregoing. Find out and report as to whether the Ambassador is so situated that proposals to solve the issue by continuing the present inter-Allied railway control in a more effective form will be entertained by him on behalf of his Government.
- The same sent to the Ambassador in France as no. 97, except for the first sentence of the second paragraph which states that the Department hopes soon to confer with the French Ambassador on the matter (file no. 861.77/1960b).↩