The Secretary of the Navy ( Denby ) to the Secretary of State

Sir: I have the honor to acknowledge the receipt of your communication of 22 March 1922, with attached memorandum regarding [Page 853] negotiations that are now being carried on between the Federal Telegraph Company and the Radio Corporation of America as to the concession in China now held by the Federal Telegraph Company for the erection of certain radio stations in China and their operation as a part of a joint company in the development of trans-Pacific radio communications.

I am in general accord with the proposals set forth in the memorandum and I feel that American communications in the Pacific, so far as radio is concerned, can be put upon a firm basis if some such company or companies as has been proposed is set up and a proper traffic agreement made with the present Navy high powered circuits in that area. Until some mutual agreement is made between the Government system and private systems, I consider that the United States will be at a disadvantage, so far as handling of the communications for our Government and our private interests is concerned.

Any traffic agreement between the Navy Department and the proposed new operating company in the Pacific should, I believe, be based on the following principles:

Recognition of the general principle that government and commercial radio communication between the United States and its possessions and between United States possessions where the Navy now has or in the future may have radio stations shall be carried on by the Navy, and that commercial communication between the United States and foreign countries shall be carried on by the company, (the present privately owned high powered station at Honolulu to continue as at present in the handling of commercial traffic with its present or future foreign connections).
The maintenance of a circuit between countries of the Pacific on the one hand and the United States on the other to be controlled throughout by either the company or the Navy or both, and that traffic to or from American territory be handled by the company or the Navy or both.
The fullest co-operation between the company and the Navy shall be established and cultivated with the view of maintaining the best possible service. The circuits of either system to be made available to the other in case of breakdown or delay as may be necessary to give the best service.
The right of the Navy’s system to handle United States Government or foreign government state telegrams with connecting foreign government stations where there is direct radio communication.
The right of either the Navy or the company to make traffic arrangements with other United States’ radio companies similar to those proposed between the company and the Navy. In case of proposed new traffic agreements between either the Navy or the company on the one hand and foreign private companies or Governments on the other, the proposals shall be considered in conference between the Navy and the company before any agreement is concluded. In any case neither the Navy nor the company shall make more favorable arrangements with a foreign company or government than with an American company or the Navy.

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Any such traffic agreement would, of course, be subject to the United States laws, so far as the Navy Department is concerned in its authority for carrying out its part of the agreement.


Edwin Denby