The Secretary of State to the Minister in China (Schurman)
103. Your 127, April 3, noon, and 175, April 28, 2 p.m.87
Department is greatly concerned to note evident desire on the part of some of the officials of the Chinese Government to proceed on a comparatively large naval building program at this time when the trend of such undertakings is distinctly in an opposite direction as evidenced by the naval treaty signed at Washington February 6, 1922.88 The American Government would view with great concern any steps which the Chinese Government might take to nullify the work and influence of the recent Washington Conference and no less so any steps which the Chinese Government might take to vitiate an American contract entered into in good faith. This Government would of course take every necessary precaution to protect the contractual rights of the American Corporation and would expect the Chinese Government, if it should be decided that it should go ahead with its naval expansion regardless of its present financial and internal difficulties, and in spite of the practically universal desire to reduce naval armament, to live squarely up to the terms of the Bethlehem contract. The whole question is now under discussion with representatives of the Corporation and further instructions will be telegraphed you. In the meantime you may informally and orally communicate the above to the Chinese Government and express the hope that the matter may be held in abeyance until you receive further instructions.