861.01/799: Telegram

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

81. Your telegram 78, March 13, 6 p.m. The French Ambassador at Washington presented April 2 an informal note to the Department stating that the object of the French warning to China was not to oppose the conclusion of a Sino-Russian agreement but to induce the Chinese Government “to refuse to deal with [in] this matter with the Soviet Government without having made a formal reservation of the rights of foreign stockholders and creditors of the Railway Company. Resolution No. XIII of the Washington Conference has for its very object the protection of these rights.”

Resolution XIII clearly imposes upon China the responsibility for “performance or non-performance of the obligations towards the stockholders, bondholders and creditors of the Chinese Eastern Railway Company which the Powers deem to result from the contracts under which the railroad was built,” et cetera.

The Department considers that while that Resolution must be upheld, this Government cannot intervene on that basis expressly in behalf of the reorganized Russo-Asiatic Bank unless and until its legal identity with the original Russo-Asiatic Bank shall have been established.

In order to avoid the possibility of any misunderstanding on the part of the Chinese, you should not join with the representatives of France or other countries in protests against China’s recent negotiations with Russia; but you may send to the Chinese Foreign Office a separate note recalling that China’s responsibility as trustee under [Page 487] the terms of Washington Conference Resolution XIII (quoting the Resolution) is an obligation that is not to be ignored or unilaterally invalidated by China in the course of any negotiations with other parties regarding the railway. This note should avoid mentioning the Russo-Asiatic Bank, and should make it clear to the Chinese that the United States Government stands for the protection of all interests including Russian and is not endeavoring to prevent the conclusion of a Sino-Russian agreement.

Your telegram No. 70, March 3, 1 p.m.15 In reply to inquiries from Dr. Wang and others you may state that this Government upholds Washington Conference Resolution XIII and could not approve a change of any kind in the status quo (whether initiated by China, Russia or any other nationality or by the old or new Russo-Asiatic Bank) unless the rights of all creditors and other parties in interest were adequately protected.

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