893.51 Con. Ob./42
The Counselor of the Japanese Embassy in China (Horiuchi) to the Counselor of the American Embassy in China (Lockhart)14
Sir and Dear Colleague: I have the honor to acknowledge the receipts of your communication dated December 30, 1938,12 and of several preceding notes addressed to this Embassy during the year requesting this office to bring to the attention of the appropriate authorities concerning certain obligation of the Peking–Suiyon Railway due and payable to the American Companies. In reply to these notes I beg to state as hereunder mentioned:
Following the outbreak of the present hostilities the Peking–Suiyuan Railway had sustained great damages which, together with the desertion by the staff members of the office and other employees of the Railway, caused suspension of the traffic of the line.
[Page 295]Under the circumstances, the Japanese military was compelled by tactical necessity to resort to an emergency measure and thus effected the placements of required personnel and rolling stock and materials for the repairs of the damaged line furnished by the South Manchuria Railway Company and the resumption of the services principally for the military transportation in the beginning, was made possible under the direction of the North China Office of the South Manchuria Railway Company, which has been continued to date.
In this connection, I desire to direct your attention to the fact that the military operations are still continued and that the Peking-Suiyuan Railway is still engaged principally in the military transportations and that because of the existing conditions, certain preferences are given to the traffic of both passengers and freight directly or indirectly concerned to various requirements for military operations; and therefore, that the normal railway services have not yet been re-established. Consequently as regards the matter such as the receipts and expenditure of the line, since its greater portion is comprised of the military accounts, their computation such as obtainable under normal conditions has been made extremely difficult. Assuming that, however, the accounts are placed under a normal basis the expenditures will still exceed the revenues from general traffic services. And these expenditures include such defrayments from military account as may be transferred to railway account and other items for large numbers of personnel and large quantities of material furnished by South Manchuria Railway Company for the restoration and maintenance of the railway, all of which as operation expenses naturally have the priority in payment.
Although it is considered proper that the disposition of claims of the American firms against the said Railway should be negotiated with their debtors, the Chinese authorities, the Japanese authorities by no means intend to disregard the issues in so far as they are concerned. This is also evidenced in the repeated statements made public by the Japanese Government. Therefore, it is earnestly hoped that you will take into consideration the fact that affairs of this nature cannot be determined, as stated above, on the basis of normal conditions due to the hostilities still in progress. I may add that as the contents of your last note had been transmitted to the proper authorities, I shall again call their attention to give favorable consideration in the matter.
I avail myself [etc.]