811.79690 Pan American Airways/76
The Ambassador in China ( Johnson ) to the Secretary of State
[Received October 5.]
Sir: I have the honor to refer to previous correspondence relative to the Pan American Airways, Inc., and to report that a member of my staff was informed confidentially by Mr. Harold M. Bixby, chief American executive of the China National Aviation Corporation, in Shanghai on September 3 last, that negotiations for facilities for the Pan American Airways, Inc., at both Macao and Hong Kong making possible the linking of that company’s service with that of the China National Aviation Corporation would culminate favorably within a short time.
Mr. Bixby said that due to British pressure the contract which the Pan American Airways had submitted to the Portuguese Government, which had been approved by the Governor of Macao, had been rejected at Lisbon, and that the proposal made by the Portuguese authorities in return contained so many unacceptable provisions that it was impossible to revise it into a compromise draft. Mr. Bixby had assisted in drafting an entirely new contract when he arrived in New York recently after a seven-day flight from Manila, and that contract had been submitted to the Portuguese Government with virtually no hope on the part of the Pan American Airways officials that it would be accepted. They feared that an impasse in the negotiations with Portugal had been reached. Much to their astonishment, however, the British pressure apparently having been relinquished, possibly due to the British authorities’ decision to invite China to send planes to Hong Kong and to Great Britain’s preoccupation with the situation in Spain, the draft was accepted in toto. This action was particularly gratifying to the Pan American Airways since the draft included provisions for rights in the Azores even more important to the trans-Atlantic service than the rights in Macao to the trans-Pacific [Page 646] service. Mr. Bixby said that it only remained now for the Portuguese authorities to invite the Chinese Government to send planes to Macao to connect with the service of the Pan American Airways, Inc. He understood that such action would be taken.
The Pan American Airways, Inc., are glad to have this link as an auxiliary or reserve and so as to maintain a stronger position vis-à-vis the British. Mr. Bixby said, moreover, that the China National Aviation Corporation would probably establish some sort of service with Macao despite the fact that its main terminus would be in Hong Kong.
The British in their negotiations with China had held out for three privileges: most-favored-nation treatment, the right to fly over China, and permission to land in Chinese territory in case of emergency. The Chinese authorities had finally been persuaded to grant the first and last of these privileges but were not willing to grant permission in writing for British aircraft to fly over Chinese territory in view of their reluctance to grant the same right to the Japanese. Upon an intimation from an American source, however, that the Chinese authorities would in fact have no objection to the flight of British planes over Chinese territory provided the right to do so did not have to be stated publicly or in writing, the new Governor of Hong Kong consented to relinquish this point in the negotiations, and arrangements have already been made for the inauguration of the China National Aviation Corporation service with Hong Kong.
Mr. Bixby felt, moreover, that as soon as the Governor, who is ill at present, is able to give consideration to the final details of the agreement providing for air facilities for the Pan American Airways, Inc., in Hong Kong the whole matter would be satisfactorily concluded.
Mr. Bixby remarked incidentally that trans-Pacific passenger service between Manila and San Francisco would be inaugurated on or about November 1, 1936.
Respectfully yours,