The Minister in China (Schurman) to the Secretary of State
[Received 10:40 p.m.]
313. Your 159, August 2, 3 p.m., and [my] 284, August 12, noon. I find situation at Harbin and other points on Chinese Eastern Railway, over which I traveled from one end to other, exceedingly serious [Page 781]as local Chinese authorities who now have the power seemed determined to take forcibly from the railway company and without any regard for agreements between China and the Russo-Chinese Bank all land not actually needed for strictly railway purposes and they have already effectually stopped all transactions in real estate on the part of the railway company and their tenants by the issuance of orders to notaries and other officials, which have the practical effect of invalidating all new deeds, leases and mortgages greatly to the detriment of the business interests of all classes of the community.
In a speech at Harbin September 6th which was published in full in English, Russian and Chinese papers of 7th, and which is reproduced today in Peking papers, I set forth the grounds of the protest which the four Governments had presented to the Chinese Government urgently [sic] the danger of international embroilment and made an earnest plea for the settlement of the dispute by conference between Chinese local authorities and the directors of the railroad company or by reference to competent disinterested tribunal in case agreement could not be reached by such conference. Petithuguenin87 immediately cabled report of speech to Paris headquarters of bank, and after observing effects for a few days again cabled that in his opinion it would lead to peaceful adjustment.
Nothing, however, being certain in China till it is an accomplished fact, I decided to endeavor to get assurances from Chang Tso-lin who controls Chinese consular general [sic] at Harbin. I had long conference with him in Mukden afternoon 10th and found him not only obdurate but rude in his insistence on Chinese rights to take over railway lands and opposition to interference, as he called it, on the part of American and other governments in that [what?] was no concern of theirs. I set forth the terms of Washington Conference resolution, rehearsed the facts of the situation and analyzed the agreements by which Chinese Government was bound but without producing any apparent effect either in altering his views or mollifying his spirit. I then asked him what China would gain by his procedure if she antagonized the four great powers. I intimated, in spite of his previous disclaimer, that he would again be active in politics south of Great Wall and inquired how it would then further his personal ends if he had to meet the opposition of the four great powers. There followed immediately marked change in his demeanor and mental attitude and he asked me what course I would suggest for him to follow. I replied that I recognized that his face must be saved and that instead of rescinding the order he had issued [Page 782]creating a new land department [apparent omission] enough to suspend its [it?] to give time for conferences between the Harbin authorities and the railway company. He is [was?] friendly and conciliatory, intimated it would be possible to find an amicable solution but said he would confer with his subordinates before acting.
In the evening after a very [apparent omission] and delightful dinner, which he gave in my honor, he reverted to the subject in private, stated that the policy had not originated with him but with his subordinates (this is the general belief at Harbin), and assured me again that he would find a way of satisfactorily settling the dispute.
I submit the following reflections for your consideration:
If by any mischance the present good prospects are not realized, America at least would seem to have done her full duty in striving to protect the sanctity of international engagements. On the other hand, if the settlement that now seems so promising is effected, the material gainers will be Soviet-Russia and France. Yet Karahan88 denounces the “interference” of the “capitalistic” and “imperialistic” powers in a matter that is “none of their business”, and France, whose nationals control the stock of the Russo-Asiatic Bank, will in due time monopolize through the bank the business of selling supplies to the Chinese Eastern Railway. At this distance it seems possible also that French material interests combined with French insight into Russian psychology may induce France to take the lead among the great powers in the recognition of Soviet Russia.