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

Sir: You were good enough under date of April 10, 1928 (your FE–893.74) to inform me of your conversation on April 4, 1928 with the Japanese Ambassador and concerning Chinese wireless matters. You asked for my observations or suggestions with respect to that conversation.

The American Companies interested in the Federal Wireless Contracts with China have long realized how desirable would be international cooperation, especially between Chinese, Japanese and Americans, in the completion of a comprehensive radio system for China and how essential would be such cooperation in the successful working of such a system after it had been completed.

In this realization we suggested long ago that a comprehensive and efficient wireless service could be formed in China by cooperation between the Mitsui and the Federal projects, both completed and brought up to date; that such a system would prove profitable and provide revenues sufficient to pay for such projects; that the American Companies concerned, disposed to enter into such a cooperative arrangement, would be willing to put large sums of their own money to the hazard of the correctness of their beliefs. This proposal seemed to us to protect equally the interests and the dignities of all parties concerned. Our suggestion was communicated to the Japanese in your memorandum of October 28, 1926.

In the same realization and when the suggestions contained in your memorandum of October 28, 1926 did not appear to be acceptable, Mr. Owen D. Young, Chairman of the Board of this corporation, proposed that the Japanese, Chinese and American interests concerned come together for the purpose of attempting to find a business solution, it being understood that the parties would be willing to consider any proposal for a solution that any of them might bring forward; that a proposal theretofore made by the Chinese, the proposals made by the Japanese and those made by the Americans might all be considered and as well any new suggestions that any of the parties might submit during the discussions. This suggestion was communicated on or about October 20, 1927 to the Japanese Ambassador by Mr. Johnson, Assistant Secretary of State.48

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You now inform me that none of these suggestions have been found acceptable; that in his conversation with you on April 4, 1928 the Japanese Ambassador referred to Mr. Debuchi’s memorandum bearing date November 29, 1927, handed by him to Mr. MacMurray and he said that his Government would be willing for the companies concerned to come together and negotiate on the basis of Mr. Debuchi’s memorandum but on no other basis; that the Japanese Ambassador said his Government would not be willing for the companies concerned in the proposed negotiations to discuss any suggested solution any of the parties might bring forward, as had been proposed by Mr. Young, or the specific solution outlined in your memorandum of October 28, 1926 or any other proposal save that one contained in Mr. Debuchi’s memorandum.

It would be quite impossible for the American Companies concerned to consent to negotiations into which they would enter pledged in advance to support and maintain the contract rights of the Japanese Company while equally pledged to surrender their own.

The Japanese contract provides for the erection of a radio station and as security for the purchase price it provides for the operation of the station under Japanese control until the purchase price shall have been paid. The station has been erected.

The American contracts provide for the erection of several stations and for joint operation by Chinese and Americans during a limited period and while a part of the purchase price for such stations is being paid; that after the expiration of such period the stations in question shall be turned over to the Chinese unconditionally, subject only to the obligation to pay that part of the purchase price then remaining unpaid.

Mr. Debuchi proposes that the contracts of both parties, Japanese and American, be cancelled and that China resume the rights concerning radio in China which theretofore she may have granted to either Japanese or Americans.

The inequality of this suggestion arises from the fact that the station provided for in the Japanese Contract has been erected, while those provided for in the American Contracts have not been. The cancelation of the Japanese Contract would not cancel the station the Japanese have erected. On the contrary, Mr. Debuchi’s proposal contemplates that the Americans shall pledge themselves to contribute equally with the Japanese to a loan which will permit the Chinese to pay for the station the Japanese have erected. Since payment is all that is left to be done under the Japanese Contract and since the monopoly asserted is claimed only as a security for payment and would naturally end when payment had been made, such, payment would complete the full performance of the Japanese Contract.

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Asked to pledge equal contribution to payment for the Japanese station at Peking, Americans are offered the opportunity through the negotiations to secure, if they may, a new contract to erect a station at Shanghai at cost equal to that of the Japanese station at Peking.

May I point out that conditions in China are not such as to offer large hope that such a contract, even though obtained in the negotiations suggested and from a Government in Peking, could ever be performed at Shanghai. The Government with which negotiations concerning the Peking station must be carried on is not the Government which controls the area in and around Shanghai. May I further point out that the radio art in recent years has undergone rapid development and that the Japanese radio station at Peking, never thought to be technically efficient, is rapidly becoming obsolete and worthless.

I cannot recommend to the American Companies concerned that they agree to surrender their contracts, agree to contribute to the full performance of the Japanese Contract and thereupon enter into negotiations hoping as a result to complete arrangements under which they may somehow find means to erect stations at Shanghai.

I regret very much to be compelled to inform you that we are not able to find in Mr. Debuchi’s memorandum any acceptable basis for undertaking negotiations and that in addition to those we have heretofore made, we have no further suggestions to make.

Very respectfully,

J. G. Harbord
  1. See memorandum by the Assistant Secretary of State, Oct. 20, 1927, Foreign Relations, 1927, vol. ii, p. 476.