893.77/3003
The Consul at Tsingtao (Sokobin) to the Minister in China (Johnson)56
Sir: I have the honor to refer to this Consulate’s confidential despatch No. 6 of December 22, 1934,57 File No. 877/800, on the above subject.58
[Page 184]Early this month there appeared a report in a local Chinese daily newspaper to the effect that the Tsingtao–Tsinan Railway’s fund for the redemption of the Gold Yen 40,000,000 Chinese treasury notes held by the Japanese Government now amounted to $7,000,000 Chinese currency and that because the rate of exchange is so favorable to China no great difficulty would be encountered in making arrangements at an early date for the payment of the entire issue of treasury notes.
This Consulate now learns from a very well informed source that correspondence and representations made by the Tsingtao–Tsinan Railway to the Chinese Government at Nanking in regard to the redemption of the treasury notes have revealed an attitude on the part of the government which is amazing. In brief the railway administration has been informed that the Central Government feels that it is futile for the railway or the government to be concerned with the accumulation of a fund for the payment of the Yen 40,000,000 in notes because redemption or no redemption, the railway is bound to fall into the hands of the Japanese, and accordingly the Government has suggested that the reserve already in hand be used for other purposes.
The Consulate repeats that this information comes from a most reliable source.
If the report is correct that the Chinese Government is not concerned with the redemption of its own note issue for the Tsingtao–Tsinan Railway, payment of which falls due in 2½ years, it is but an example of the ineptitude of Chinese officialdom in handling problems which require statesmanship and diplomacy of the highest order. To give up the Tsingtao–Tsinan Railway means to give up Shantung and to give up Shantung means to give up in time all of China lying north of the Yangtze River.
Whatever may be Japan’s design and intentions on the territorial or administrative integrity of China, all that is required of China to put herself in a sound legal position over and beyond her sovereignty is the payment of a sum which today is absurdly small for the Chinese Government. Yen 40,000,000 at the current rate of exchange is equivalent to less than $28,000,000 Chinese Yuan, and equivalent to less than 20,000,000 Chinese silver dollars.
The Chinese Eastern Railway was the object of much concern by the powers at the Washington Conference in 1922. It has now been lost to China.
The Tsingtao–Tsinanfu Railway was the object of similar concern at the same time. Its transfer to China was a detail in that great [Page 185] plan to secure peace in the Far East. That plan has received some blows; will China now through incapacity to take views other than those held by a military clique deal a blow to peace in the Pacific and to itself?
Respectfully yours,