893.79694/14: Telegram

The Ambassador in China ( Johnson ) to the Secretary of State

510. Department’s 252, October 21, 2 p.m. I was informed this morning by the Chairman of the Foreign Affairs Commission of the [Page 361] Hopei-Chahar Political Council that the reported agreement has actually been signed.

He said that the Huitung Company, which is being established as the competent organization, is in the nature of a private enterprise, with the chairman of the board of directors to be appointed by the afore-mentioned Political Council. The capital of the enterprise, 2,500,000 yuan dollars, will be 50% Chinese and 50% Japanese; however, the value of the land furnished by the Chinese side for landing fields and other installations will be computed as part of the Chinese capital and likewise the value of the airplanes, which are to be Japanese and will be figured in the total of the Japanese capital. (This arrangement would probably relieve the Chinese side of the necessity of paying more than a moderate sum.) The technical personnel, including pilots according to my informant are to be Japanese. The vice chairman of the company it is anticipated will be Kodama, vice president of the “Manchuria Air Transport Company”. According to the terms of the agreement the route will be Peiping, Tientsin, Dairen, Mukden, Hsinking, and my informant stated that the present agreement did not envisage the extension of the service to other points in North China. The service, he stated, will probably begin the first part of next year. The agreement as signed is general in nature, and the particular procedure remains to be worked out.

According to a report appearing in today’s press the Chairman of the Economic Commission of the Political Council has denied that any agreement has been signed, but admits that the Huitung Company is to be organized “to deal with through air traffic”. He stated that the organization would accord to Chinese company law and would be on the lines of the China National Aviation Corporation.

According to the original press report, the agreement was signed by Sung Che Yuan and Horiuchi, Japanese Consul General at Tientsin, on October 17 in Peiping.

A Japanese official connected with the military confidentially informed a member of the Embassy that agreement in actuality gives legal sanction to flights that are now being made. It will permit of the establishment of additional landing fields, and is intended to lead to the extension of the projected airline into other parts of North China, more particularly to such important points as Taiyuan, Shansi; Kalgan, Chahar; and Paotow, Suiyuan. News despatches from Nanking would seem to indicate that the National Government has no official knowledge of the matter, and that it is planned to repudiate the agreement if signed. It has been alleged, however, without confirmation, that in actual fact the permission of the National Government was obtained by the Political Council in advance. It is to be noted that Ke Ting Yuan, Secretary General of [Page 362] the Council, participated in the recent discussions at Hangchow, evidently in the capacity of delegate of Sung Che Yuan.

Repeated to Nanking. To Tokyo by mail.

  1. Telegram in three sections.