793.94/1256: Telegram
The Secretary of State to the Minister in China ( Schurman )
10. Your number 16, January 16, midnight.
You will see Minister for Foreign Affairs and referring to his conversation with you advise him that Mr. Balfour and I have discussed the Shantung question with both Chinese and Japanese delegations, and very earnestly explored the possibilities of settlement. We have been forcibly impressed with the fact that, whatever the merits of the several issues involved, the situation requires that both Powers concerned must act on the realization that no ideal or academic solution is possible and that they must be prepared without further delay to accept a reasonable practical basis of compromise as the only alternative to a failure of negotiations which would aggravate the question and place it beyond the possibility of adjustment for an indefinite period. This necessity rests the more heavily on China because of the fact that the conduct of these negotiations in the atmosphere of the Conference affords an opportunity such as cannot be expected to recur for obtaining Japan’s relinquishment of the position which she now holds in Shantung; and the fact that any settlement now arrived at would be reported to the Conference and taken cognizance of by it would afford the highest sanction for an agreement reached at this time.
[Page 942]The study which Mr. Balfour and I have given to this question gives us reason to believe that there is within the reach of China the possibility of a settlement far more favorable than I had judged feasible when first studying this problem last summer. The agreements thus far tentatively reached have attained an apparently satisfactory adjustment of all the issues involved, except those connected with the salt industry at Kiaochow and with the Shantung Railway. I am hopeful that the former presents no fundamental issue of principle, and that an agreement should be easily possible. The whole settlement concerning Shantung is therefore dependent upon the Railway issue. The Japanese Government has hitherto insisted absolutely upon joint ownership and operation as the sole alternative to the maintenance of the position in which they are now intrenched. They have now been brought to consider allowing China to purchase the Railway from them on a basis involving the following 3 principal points:—namely, method of payment, term of the financial transaction involved, and degree of administrative supervision over operation. Mr. Balfour and I have reached the conclusion that the best possible terms which China can hope to obtain on these points are the following:—deferred payment by Chinese treasury notes running for 15 years, but redeemable at any time after 5 years; appointment of a Japanese chief accountant, and of a Chinese chief accountant, of coequal powers, both of them subject to the control of the Chinese director-general of the Railway; and appointment of a Japanese traffic manager subject to the control of the Chinese director-general, and with the understanding that, in anticipation of the probable redemption of the road by China at the end of 5 years there may be appointed at the end of 2½ years a Chinese assistant traffic manager to work under the Japanese traffic manager for the remainder of the 5 year period, with a view to preparing himself to act as traffic manager upon the redemption of the Railway. Should China fail to redeem as anticipated, this arrangement for Chinese assistant traffic manager would of course be suspended until China should give six months notice of intention to redeem.
You will very earnestly impress upon Doctor Yen the conviction, which is fully shared by Mr. Balfour and myself, that this arrangement represents the final limit to which Japan is prepared to go and which China must be prepared to accept as the only available means of realizing the hope of reestablishing herself in Shantung within the foreseeable future. We are quite aware that this involves concessions which China will find it hard to make and might not indeed be called upon to make if the question were presented as a new issue, unprejudiced by commitments on the part both of China and certain of the Powers. But since these concessions afford China the opportunity to obtain in 5 years complete reestablishment of China’s authority [Page 943] and control over the Railway and to regain at once virtually the whole of the rights once ceded to Germany in Shantung, we feel that the concessions involved are in the long run so trivial in comparison with the advantages which China would receive, that it is inconceivable that they should stand in the way of a settlement. We feel that China owes it to her own interests not only to avail herself of the opportunity to obtain relief from the situation in Shantung which cannot but become more aggravated with the course of time, but also to avoid a course of action which would frustrate all that it is hoped to achieve by this Conference for the good of China.
[Paraphrase.] In case Dr. Yen should indicate that he is not willing to authorize the acceptance of a settlement of the railway issue in accordance with the above plan, you may frankly tell him, at your own discretion, that although the American delegates fully respect the effort of China to secure the best possible terms, they all consider the points remaining at issue to be of such little importance compared with the other interests at stake that any degree of toleration with regard to a refusal by the Chinese to meet the practical situation which confronts them now would not be justified. You may add that I have the President’s authority for stating this to be the attitude of our Government. Various American expressions of sympathy with an academic position may have misled the Chinese. Before deciding against such a settlement the Chinese should realize that if they choose to break off negotiations on the relatively unimportant issues outstanding and thus bring upon themselves the disasters which may be expected, they cannot count on any support either from public sentiment in the United States or from this Government. [End paraphrase.]
Mr. Balfour and I have this morning discussed the question with the Chinese Delegation in this sense, and have impressed upon them that the solution indicated above is dictated not by our wishes but by a realization of the imperative necessities of the situation in which China now finds herself.
Mr. Balfour is telegraphing similarly to British Legation. You will communicate with Alston23 and arrange with him for conversations with Yen severally but in the same sense.
To obviate possibility of delay your reply should be sent by both cable and radio. British Legation will facilitate your reply by Eastern Extension cable. You may offer Chinese Foreign Office and British Legation Naval wireless facilities for their replies.
Repeat to Tokyo for confidential information only. Number 6.
- Sir Beilby F. Alston, British Minister in China.↩