893.77/2714
The Consul General at Shanghai (Cunningham) to the Minister in China (MacMurray)50
Sir: I have the honor to enclose one of the most amazing statements that it has been my privilege to note as being made by a responsible minister of any government, as contained in the news item issued by Reuter’s, dated Nanking, August 22, 1929, appearing in the North China Daily News of August 24, 1929, under the heading “China’s Railway Schemes”51 and purporting to be a statement to newspaper representatives by Mr. Sun Fo, Minister of Railways, of the National Government. The revelations contained in that statement indicate more strongly than any financial statement which has been noted previously, that all government undertakings have been undermined by the military authorities without any consideration for the capital invested or for the creditors. Mr. Sun Fo is quoted as stating that
“on account of interference by military authorities it has been most difficult to reorganize the various railways of the country.”
The following is a summary of the monthly payments which Mr. Sun Fo states have been made by the various railways of the North to military groups, aggregating nearly $2,000,000:
| Peking-Hankow Line | $850,000 | monthly |
| Peking-Suiyuan Line | 200,000 | “ |
| Peking Mukden Line | 300,000 | “ |
| Lunghai Railway | 400,000 | “ |
| Total | $1,750,000 | “ |
Furthermore, on account of the heavy subsidies to the military, freight rates on the Peking-Suiyuan Line had to be increased, so that the income from this line, formerly averaging $800,000 a month, in recent years was reduced to $300,000 a month.
Mr. Sun Fo states that at the Second Plenary Session of the Central Executive Committee of the Kuomintang it was decided that two-thirds of the Boxer Indemnity Fund should be used for railway construction; two-thirds of the British Boxer Indemnity Fund for the completion of the Canton-Hankow line, and two-thirds of the Russian Boxer Indemnity Fund for the completion of the Lunghai line, with a total failure to take into consideration the conditions under which certain Boxer Indemnity Funds have been remitted.
[Page 171]In the statement concerning the manner in which funds of the railway have been looted, Mr. Sun Fo informs us that the country’s total railways aggregate 7000 miles and their debts amount to something like $650,000. He then intimates that the loan of $60,000,000 required for the reorganization of the country’s railways will be a revelation to the public. It scarcely seems conceivable that financiers in China, or elsewhere, could be induced to invest in bonds for the reorganization of railways after such an indictment of the railway administration and military action as contained in Mr. Sun Fo’s statement. … The patriotism of the military has again been given the acid test by the revelations and the surprisingly frank admissions of the Minister of Railways.
I have [etc.]