893.74/458

The President of the Radio Corporation of America ( J. G. Harbord ) to the Secretary of State

Mr Dear Mr. Secretary: I have the honor to invite your attention to the following resolution adopted by the Board of Directors of the Radio Corporation of America at a meeting held this date:

“Whereas, it has been brought to the attention of the Board of Directors of the Radio Corporation of America, that Rudolph Spreckels, a director and the principal stockholder of the Federal Telegraph Company of California, by communication dated April 8th, 1924, to the Directors of the Federal Telegraph Company of California did state:

‘After careful consideration, I am convinced that the language used in the Chinese contracts is deceptive in that they create a partnership, but do not disclose the fact that the Chinese Government is to actually provide the entire sum necessary to complete the project.

‘I cannot believe that the State Department at Washington has been correctly informed of the true situation in connection with these contracts.

‘The contracts were negotiated by Mr. R. P. Schwerin as President of the Federal Telegraph Co. (California), but said contracts have been assumed by the Federal Telegraph Co. of Delaware in which company the Federal Telegraph Co. (California) holds a thirty per cent stock interest.

‘I acquired my stock holdings in the Federal Telegraph Co. (California) after the contracts were consummated, but I cannot permit this company to become further involved in a transaction of this character without protest.

‘It is quite clear to me that the present attitude of the Chinese Government toward the contracts concern the Federal Telegraph Co. of Delaware alone, but I am unwilling that any officer of the Federal Telegraph Co. (California) shall be involved in negotiations with the Chinese Government in connection with these contracts, or in the execution of the contracts. In other words, it is no longer satisfactory for this company and the Federal Telegraph Co. of Delaware to have the same individual as the executive head.

Yours very truly,

(Signed) R. Spreckels’

and

Whereas, at a meeting of the Board of Directors of the Federal Telegraph Company of California on April 15th, 1924, R. P. Schwerin was removed as President of that corporation and all powers of attorney theretofore given by that corporation to him as President or General Manager or otherwise to act for or on behalf of that corporation were revoked, and

Whereas, notwithstanding the fact that the Board of Directors of the Radio Corporation of America understand and believe that the State Department at Washington has been correctly informed of the true situation in connection with these contracts and has always understood the precise scope and meaning thereof, and

Whereas, Radio Corporation of America does not believe that any advantage has been taken of the ignorance or lack of understanding of the Chinese Government in the negotiation of these contracts, and

Whereas, Radio Corporation of America did cause to be organized the Federal Telegraph Company of Delaware, for the purpose of taking over said Chinese concessions from the Federal Telegraph Company of California and the financing and construction of the [Page 575] Chinese stations, in which Federal Telegraph Company of Delaware the Radio Corporation of America owns seventy per cent of the capital stock.

Nevertheless, the Radio Corporation of America being unwilling to proceed with the carrying out of these contracts, if it be true that the Chinese Government has acted under misapprehension or lack of knowledge and if the said Chinese Government shall so assert,

Resolved that the Radio Corporation of America is willing and tenders itself ready to join with the Federal Telegraph Company of California in cancelling all contracts relating to the said concessions or to the carrying out thereof, and

Further Resolved, that the President be and he hereby is authorized and instructed to take steps to ascertain whether the State Department has been correctly informed of the true situation in connection with these contracts and whether the Chinese Government makes any claim or complaint as to having signed these contracts under misapprehension of fact or lack of knowledge.”

The Radio Corporation of America entered upon this Chino-Federal enterprise on direct assurance from Mr. R. P. Schwerin that it had the hearty approval of both the American State Department and the Chinese Government. Copies of all the contracts were long since furnished to the State Department. That it has understood and has had no question of their integrity has been shown by its continued and efficient support of them to this day. The signatures of the proper officials of the Chinese Government to the contracts have been witnessed by proper American Legation officials in Peking. Our information is that Dr. Sun, the Chinese Vice Minister of Communications, is a graduate of Cornell University, knowing English well, and that he repeatedly discussed these contracts with Mr. Bell, Mr. Peck, Mr. Julean Arnold of the American Legation and Mr. Schwerin and Mr. Moss. These gentlemen with Minister Schurman had numerous discussions with Dr. Koo, Wu Yu Lin, the Minister of Communications, and the Prime Minister Chan Tze Ti’In[sic]. Of the integrity of the contracts we have had no doubt.

Mr. Rudolph Spreckels, of San Francisco, very recently and suddenly purchased a control in the Federal Telegraph Company of California, and now charges that our State Department has not been correctly informed of the true situation in connection with these contracts and that the Chinese Government signed them under deception. I am instructed by the Board of Directors of the Radio Corporation of America to ask assurance of the State Department on these two points, in order that we may know whether it is proper for us to proceed in this enterprise from the standpoint of morality and business integrity.

Very respectfully,

J. G. Harbord