893.77/2769: Telegram

The Ambassador in Japan ( Forbes ) to the Secretary of State

249. The Foreign Office informs me that press despatches indicating impending trouble between Japan and China in Manchuria are misleading. The following oral statement was added:

The Mukden authorities in disregard of Japanese protests against infringement of agreement have been engaged in building railways parallel to the South Manchuria Railway, and the sections comprising the main line from Anhsi to the sea are about to be connected. The Japanese Government is also greatly concerned by persistent reports from China of negotiations with foreign capitalists for funds for construction of additional Chinese lines to the serious prejudice of South Manchuria Railway, as public opinion in this country is acutely sensitive on the necessity of protecting Japanese rights in this area. In order to find an amicable settlement of a question of several years standing it has authorized the South Manchuria Railway to offer to help Mukden finance the construction of new lines which do not parallel the South Manchuria Railway. If Mukden will not accept such proposals and insists on the completion and extension of parallel lines, the South Manchuria Railway will be prepared to withdraw its objections on the conditions that Mukden agrees to some equitable division of revenues.

A director of South Manchuria Railway is now in Tokyo but will return shortly to Mukden to negotiate with the Chinese.

Peiping informed.