893.74/204
The Secretary of the Navy (Denby) to the Secretary of State
My Dear Mr. Secretary: This Department has received a copy of a letter addressed to Mr. James E. Sheffield by Mr. Owen D. Young, Chairman, Board of Directors, Radio Corporation of America, under date of December 7, 1921, on the subject of “Relation of Radio Corporation of America to the Communications of the United States and its Position relative to Communications in the Far East”, copy enclosed.7
This letter outlines an arrangement which was recently consummated by the Radio Corporation of America with the main radio interests in England, France, and Germany, for radio communications in South America and suggests a similar arrangement in China as a measure towards solving the radio communication chaos now existing due to a number of conflicting concessions which have been granted to the nationals of a number of nations by the Chinese Government, and suggests that the American, British, French, Japanese, and Chinese Governments commit themselves in principle to the method proposed.
This Department agrees that some endeavor should be made to arrive at an understanding which will permit of an open door policy [Page 836] of radio communication for China and sees no objection to the plan suggested in Mr. Young’s letter, provided that it or any other plan arrived at will not prevent healthy competition among commercial companies in furnishing the necessary means for communication from China to the outside world, and will under no circumstances prevent competition in America for Chinese traffic, a provision not believed to be a part of the South American arrangement the letter proposes as a basis. In other words, this Department considers that maintaining free and open competition in the matter of radio communication in the United States is equally as important as correcting the present chaos in China resulting from an endeavor to create monopolies, and believes that every endeavor to correct the latter condition should in no wise prevent a tendency towards the former condition.
In this connection I invite your attention to the fact that the Federal Telegraph Company, of San Francisco, California, a Company which has spent large sums of money over a period of many years towards advancing the radio art and is thoroughly familiar with communication conditions in the Pacific and Far East, now has a contract with the Chinese Government for a system of radio stations for communication within and without China.8 It is believed that any arrangement as to Chinese communication, such as that proposed by Mr. Young’s letter, should permit of the Federal Company being able to compete for the business of establishing means for communication within and without China and for stations in the United States and its possessions for communication to China; and this should be true of any other Company which in the future might show its ability to establish such communication as long as there are wave lengths available or wave lengths may be properly shared with other companies.
The Navy Department fears that any commitment on the part of the Government to an arrangement favorable to a monopoly by a single commercial company, though limited to a particular service, would but lend a means towards extending monopoly to other services such as development and distribution of apparatus in general, and this is considered absolutely undesirable, particularly in the field of supply and service to ships.
In view of the above this Department favors encouraging the proposed plan only on condition that understandings reached by the commercial companies interested shall be submitted to their respective governments for approval before becoming effective.
Sincerely yours,