The Minister in China ( Schurman ) to the Secretary of State
[Received July 11—4:27 p.m.]
302. Your 161, June 29, 5 p.m. Chinese text of note signifies that in view of Ministry of Navy the entire project should naturally be canceled and the case terminated. Clause under discussion does not specify contract but uses more comprehensive term, connoting the business in its entirety, namely, contract and negotiations arising therefrom.
The reason adduced by Ministry of Navy for arriving at this decision is the inability of Bethlehem Corporation and the American Government to undertake to carry out the contract.
The phrase “should naturally be canceled” in paragraph one above is the usual polite Chinese way of saying “we are canceling it.” In other words in Chinese mentality the whole matter is terminated.
Nevertheless last sentence of Ministry’s note if literally construed indicates that cancelation is not complete without American action and furnishes logical ground for continuing negotiations.