861.77 Chinese Eastern/1347: Telegram

The Chargé in the Soviet Union (Wiley) to the Secretary of State

371. Pravda October 31st publishes Tass communiqué on present state of negotiations for the sale of the Chinese Eastern Railway. It states in substance the following:

An agreement has been reached with regard to the price which is to be 140,000,000 yen payable two-thirds in goods and one-third in cash. One-half of the cash payment is to be made upon signature of the agreement and the remainder during the course of 3 years. An agreement has also been reached with regard to the conditions of dismissal of Soviet employees and workers. The leading point upon which agreement has not yet been reached is the question of the guaranteeing by Japan of the financial obligations to be undertaken by “Manchukuo”. Disagreement also continues in respect of the conditions for the delivery of the road, “Manchukuo” demanding that all rights to the road be transferred at the moment of signature but that the road itself should actually be handed over at a future date within 1 month after signature. The Russians object to operating a road to which they have no rights. “Manchukuo” furthermore insists on a checking of inventory which the Soviet Union, in view of the price agreed on, considers superfluous. Finally the Soviet Union still claims some of the property of the road on the grounds that it is the property of the Russian State not of the railway. This question is also still unsettled.

The communiqué which ends on an optimistic note is a rejoinder to Japanese press attacks. Full text is being forwarded by pouch.19

  1. Not printed.