The Minister in China (MacMurray) to the Secretary of State
[Received January 14—10:10 a.m.39]
24. 1. I have fully discussed your number 9, January 7, 9 p.m., with Davis. He concurs in my opinion that to acquiesce in the proposal of the Japanese for a radio consortium or even take it under advisement in such a way as again to enable the Japanese to insist that the Government of China not do anything concerning the Federal contract pending the result of Japanese-American negotiations, would be a mistake.
2. While it may be that no public statement regarding a radio consortium has recently been made by the Chinese, no modification has ever been made in the emphatic statement of opposition which was presented during the Washington Conference by the Chinese delegation. [Page 1043] I am credibly informed that interested officials of the Ministry of Communications recently had occasion to say to the Japanese here that they resent the proposal of any wireless consortium that would include French and British interests, which the Chinese do not believe have any rights in regard to this matter, and that in their opinion it is a means for depriving themselves of control of wireless. When the Japanese Ambassador said of Japanese Government’s proposal that unless we were to join in urging it, it could not be expected to prevail with the Chinese, he was undoubtedly right. If it should prevail then, it would do so for the reason that the Chinese would feel we had betrayed the only hope they have of escaping the coercion of the Japanese and other interested nationalities. But as intimated by the Chinese authorities, the more likely alternative is that if we acquiesced in the Japanese proposal, the result would only be, as the Chinese believe it is intended, to destroy our position under the Federal contract.
3. The statement that Chinese nationalistic aspirations would be satisfied through the Japanese plan by placing wireless under control of the Chinese Government would not deceive the Chinese at all. They would know no commercial enterprise could afford sinking money into wireless stations in China under conditions obtaining at this time without relying upon profits of the enterprise for the payment of the debt, for which retention of such a control would be necessary as would make possible working the stations on commercial lines without danger that militarists would make such interference as has bankrupted all railroads in which an effective control has not been retained by foreigners, and that, therefore, any concession to Chinese control would be one only of appearance. I asked Baron Shidehara40 last June during my conversation with him in Tokyo,41 whether in fact that would not be the case and whether the Mitsui Station for instance would not under the Japanese plan substantially remain Japanese as it is now. He acknowledged smilingly that each station would doubtless remain affected with, the national character of those interests which had constructed it.
4. Considering the Japanese argument on a basis of economics, it does not appear to me to be sound for the reason that it presupposes that construction of two large stations would be required by any alternative plan. The fact is that establishment of a successful radio system in China, with or without a consortium, requires one high-powered station in addition to the Mitsui Station; even apart from its mechanical defects the Mitsui Station is not fitted for service as a main station, owing to its being remote from the business center of [Page 1044] China. I believe the real point of the whole Japanese opposition is this: they would prefer China to be served by a station under their own control though it is inadequate for trans-Pacific work, rather than have an adequate station built near Shanghai by Americans or any other nationality.
5. Inasmuch as no one wants to build stations the cost of which it will not be possible to repay out of the profits of operation, it is also fallacious to argue that the erection of stations adequate for communications of a world-wide nature would impose upon the Chinese Treasury an unnecessary and intolerable burden.
6. With regard to protection of the Japanese investment in the Mitsui Station by an arrangement doing away with the monopoly claimed at present by the Japanese, Colonel Manton Davis assures me that if his company were enabled to proceed with construction of the system which was contemplated by its contract, it would be in a position to offer arrangements to the Mitsui Station for cooperation, enabling that station to handle a larger business and to make a larger revenue than it could possibly anticipate if such a system were not effected.
7. I was very informally approached on this subject a week ago by Saburi, now head of the Commercial Department of the Japanese Foreign Office, at present on duty as a member of the Japanese delegation at the Tariff Conference. He intimated to me that he was expected by Baron Shidehara to find occasion, on the basis of our somewhat intimate friendship, to discuss this matter with me rather more informally and outspokenly than a purely official relationship would make possible. He conversed upon the seriousness with which the Japanese Government regards this matter with what, to me, seemed to be specifically instructed emphasis. I told him that I never had been able to understand why his Government attached the vital importance they did to what after all is a commercial venture in regard to which our people ask merely a right to do business in China. I added that I could only surmise that in the eyes of his Government the question had been magnified into having an artificial importance because it invoked considerations of amour propre or else of suspicion of our motive. His answer was that he himself felt that both of these elements entered into the question; that in Japan there were persons who could not be dissuaded from believing that our naval authorities had developed the Federal project with a view to possible war with Japan, although he himself was quite prepared to believe this was not the case and to agree with my surmise that the Japanese in the event of such a war would be more likely to profit from such a station. He was less willing to speak definitely upon the element of amour propre. He confined himself to remarking that [Page 1045] there is a tendency in some quarters to feel that the United States is seeking to override and to humiliate Japan. I assured him we only have the most friendly intention to live and let live; and that we would be only too glad to have the matter worked out in justice to the interests both of the Japanese and the Americans upon some basis of cooperation. Saburi suggested as such a basis the consortium; but after I reminded him of its unacceptability to the Government of China, he suggested a scheme of joint operation such as AEFG. I replied that it was my understanding that the arrangement referred to had neither worked efficiently or with satisfaction to any one of the interests involved. When he asked me what suggestion we might offer I answered that I was advised by the American company that it was willing to make a working arrangement between its own stations and the Japanese.
8. Saburi saw Davis a day or two later. Davis outlined such a basis of cooperation to him. Great interest in this suggestion was professed by Saburi, who said that with this in view, he would again study the whole question. He added that the question had been hitherto regarded in Japan entirely from the political point of view and without reference to the economic aspects of the matter.
9. In view particularly of the possibility that an unreserved understanding with the Japanese may be worked out through the intermediation of Saburi, which will permit the matter to proceed, I venture to make a strong recommendation that the Department firmly maintain its position on the rejection of the consortium proposal of the Japanese, which last June under your instructions I conveyed orally to Baron Shidehara, and that it has been informed that the consortium proposal is not acceptable to the Chinese and that unless and until the Government of Japan may be able to offer assurance that the Chinese have changed their stand in this matter the Department is not prepared to entertain the proposal.
10. Copy to Tokyo by mail.