893.74/326a: Telegram

The Acting Secretary of State to the Minister in China (Schurman)

[Paraphrase]

115. Reference is made to the Legation’s no. 216 of June 12.

1. You are requested to express the Department’s appreciation to Schwerin of his attitude of helpfulness and willingness to cooperate in the effort to realize his plans substantially even though the adoption of a procedure different from what he had in contemplation may be compelled by political conditions in China.

Mr. Schwerin’s and your own approval of the alternative procedure designated as proposal no. 1 gives the Department much gratification. The Department, however, is somewhat puzzled by the objections which (in paragraph 2 of section 2 of your telegram) you make to the third possibility which the Department suggested. The Department trusts that this does not indicate that it has failed to make it clear that what the Department denominated proposals no. 1 and no. 3 are substantially identical; having in view that the American radio interests, although retaining at the same time a separate identity in order that they may independently deal with direct communications between the United States and China on the basis of the Federal Telegraph agreements, are, for the purpose of necessary working arrangements, to take cognizance of the proposed British-French-Japanese radio combination. The only difference between proposals nos. 1 and 3 is that no. 3 has in view that the American Government will communicate to the British and other interested governments its willingness under certain circumstances to give approval to the American wireless interests making the arrangements which the recommendations made by the experts had in view, previous to the pertinent negotiations which will be undoubtedly undertaken by the Radio Corporation with the other national wireless interests in July at the London Conference. This represents nothing but a difference in procedure, and no objections to proposal no. 3 in principle are involved which proposal no. 1 does not equally involve. The Department’s intention, in either case, is to insist upon a consideration of the experts’ recommendations which [Page 802] would entail a renunciation of any claims to monopoly or preference, without regarding the theoretical question of the validity of any such claims. The Department hopes that Mr. Schwerin understands fully what each of these proposals involves and, in case it should be necessary for the Department to act upon some alternative to the present plan, that his approval would be given to the adoption by the Department of one or the other of these proposals as might appear to be more expedient at the time.

2. On June 13 your no. 216 was discussed with Radio Corporation representative and there was furnished him for the corporation’s use a paraphrase of the entire message (with the exception of the passage in section 1 in which reference was made by Mr. Schwerin to the possibility of his foregoing participation in the project). On account of Mr. Young’s illness the Radio Corporation has not been able to consider fully the suggestions made at that time, but has given authority to the Department to lay the matter before the Chinese Minister as the Department’s telegram no. 103 [, June 9,] had in view, hoping to prevail upon the Chinese Government to take early action on the Federal contract; and, without committing itself to the extension of time beyond July 15, the Radio Corporation has given assurance that it will, of course, carefully consider this matter before actually letting the contract lapse and that in the meanwhile, with a view to bringing about favorable action on the contract before July 15, it hopes for a continuance of pressure upon the Chinese Government.

3. For its part, the Radio Corporation has given consent to the suggestion of the Department that the British Embassy should be furnished with copies of the proposed modifications in the Federal contract in response to the Embassy’s inquiry as to whether the amendments proposed would be incompatible with the terms of the experts’ recommendations. It is the Department’s belief that under the circumstances this would be helpful but the Department would like to receive Mr. Schwerin’s approval and would appreciate an early reply in this respect.

4. The Secretary was recently advised by the Japanese Ambassador that the Japanese Government suggested, without prejudice to the consideration of the principles involved, negotiations among the national radio interests which are concerned, contemplating arrangements that would be mutually satisfactory but gave no indication as to the nature of the contemplated arrangements. The inference of the Department is that the Japanese effort will be directed towards bringing about an arrangement embracing like participation of four nationalities in radio enterprise in China and the pooling of their respective holdings. The Secretary said that, pending further information [Page 803] as to the nature of the arrangements proposed, he could not consider the matter.

The Department now proposes, unless the situation should be modified, to undertake negotiations with the Chinese Minister regarding the question of the execution, without delay, by his Government of the Federal contract independently. If satisfactory results do not follow reasonably soon it will doubtless be necessary to proceed along the lines of either proposal no. 1 or proposal no. 3.

Phillips