893.6363/126
Memorandum by the Chief of the Division of Far Eastern Affairs (Hornbeck)
| Conversation: | Mr. Walter A. Jones, of Benedum Trees Company, Pittsburgh, Pennsylvania; |
| Mr. John O. Wicks, attorney, of Pittsburgh, Pennsylvania; | |
| Mr. Hornbeck. |
Mr. Wicks asked for an appointment and I received him at six o’clock this afternoon. He brought with him Mr. Jones.
I began the conversation with the statement that I was not as well prepared as I would like to be to discuss the draft contract73 which Mr. Wicks had left with me on April 15 (see memorandum of that date73). I said that I however had in hand comments on the proposed contract which had been prepared by an officer of the Division and a memorandum giving the opinion of one of our law officers.74 I then read aloud, in paraphrase, portions of the statements of Mr. Myers’s75 and Mr. Ward’s76 observations. At two points I interjected the statement that on the basis of what I had just read, if the provisions of the contract were therein accurately reported, it would seem to me clear that the Department would not be able to give the project its approval. Mr. Wicks apparently accepted the statements which I had read as accurately accounting for the provisions in the contract to which they related. He said, however, that in connection with the provision that “the National Government of China agrees to defend this special right and every part thereof”, it had not occurred to him [Page 780] that such a provision would place his enterprise in a privileged position. He went on to give reasons, inherent in the situation in China, as he saw it, necessitating the precaution by a concessionaire of obtaining a promise on the part of the Chinese Government to afford protection.
… I then gave an account of the origin and character of the treaty provisions, of the attitude of the powers with regard to the matter, of the traditional policy and practice of the American Government, etc.; I gave a brief sketch of efforts which had been made and difficulties which had been encountered in connection with some concessions; and I mentioned the problem which is created by current efforts from some quarters to establish monopolies. I said that the American Government considers the establishing of monopolies in China a thing prohibited by treaty and undesirable in principle, and that we therefore of course could not give support or lend countenance to a project of American origin which would contemplate the establishing in fact and in appearance of a monopoly.
Mr. Jones asked certain questions with regard to the Chinese Government, the foundation on which it rests, etc.; and I answered his questions. I went on to say that any Americans contemplating doing business in China which would involve the taking and development of concessionary rights ought to have their eyes wide open to the fact that they are going into a field which is full of hazards; that the American Government, while it will do its best by diplomatic processes to obtain and maintain respect for such rights as may be theirs, will not undertake to use force or threats of force on their behalf; that the situation in the Far East is full of uncertainties and therefore the launching of new enterprises which may involve a considerable investment of capital must involve a considerable percentage of speculative character.
Mr. Wicks again remarked certain of the factors which had made him feel it necessary to contract for measures intended to throw protection around his project. I then asked whether it would not be a fact that, if these provisions were agreed upon by the Chinese, his company would possess features of legal right to advantages not enjoyed by other American oil enterprises already established in and operating in China? Mr. Wicks admitted that it would be. I then remarked that, while giving assistance and protection to any one American interest, the Government has to think of the rights and interests of all American enterprises and of the United States as a whole, and that we cannot discriminate and cannot favor one enterprise at the expense of others. I asked whether, if Mr. Wicks’s project eventuated, there would not accrue to the other American oil companies disadvantage in competition and, if this project prospered, losses in business approximately [Page 781] equal to this company’s gains. … They said that representatives of the other companies in China realize that, in the long run, their business there is doomed. They said that the Chinese intend to establish their own refineries and to find oil in China, if there is any there, and to make the oil business as much as possible their own. Hence, it seems advisable for foreign oil enterprise to tie up with the Chinese. (Note: From the way in which they explained this, I gained the impression that they have in mind the idea of assisting in the development by Chinese officialdom of what would ultimately be a Chinese governmental oil monopoly, which monopoly would be more or less in “partnership”—they actually used that word at one point—with American oil interests. They said that the Chinese could get assistance from the British but that they did not want it; the Chinese wanted business with Americans.)
Mr. Jones, reverting back to my opening remarks, asked that I take time to read the contract myself and give the matter my thought. I said that I would be glad to do this, but that I had no doubt whatever but that my associates had given me a perfectly clear account of its contents. Mr. Jones said that he would be in Washington for some time; and I said that I would be glad to discuss the matter with him at some later date.