The Minister in China ( Schurman ) to the Secretary of State
[Received 2:15 p.m.]
8. Department’s telegram no. 343 of December 31, 8  p.m. The day before yesterday I had an interview with the Minister for Foreign Affairs. In carrying out the instructions given by the Department I emphasized the dangers and complications to which these dealings with the Russian Soviet Government would expose China.
The Minister informed me that no negotiations had taken place as yet. He stated, however, that the Chinese Government’s position should be understood. The Government preferred that the Chinese Eastern should be made a state railway by China. If that could not be done the Chinese Government wished the present status to be maintained. The Minister said that the Chinese people were unanimous in their opposition to international control and that in no case was such control desired by the Government. He did not see why the Washington Conference should consider the Chinese Eastern Railway, particularly as the Conference has no Russian representation.
I told the Minister that the railway would need money to rehabilitate itself financially. His reply was that they expected to raise money by floating railway bonds in the international market and that this could be done independently of the consortium. … He added that a rehabilitated Russia would have no cause of complaint against China for the reason that China’s action in the matter would be just and also because, in contrast to the popular idea, the [Page 879] Soviet diplomats were such suspicious and keen negotiators that no advantage could be gained over them.
A new Director General has been appointed for the Chinese Eastern. He is Wang Nai-pin, Chang Tso-lin’s representative in the last Cabinet. In his letter of resignation, as reported in the newspapers yesterday morning, the retiring Director General described the present condition of the railway, financial and otherwise, as deplorable and said that the situation demanded an effective reorganization. He predicted that as a result of the Washington Conference the railway will be placed under joint foreign control unless attention is given to this matter.