761.93/4–2345
Memorandum by Dr. Arthur N. Young, American Adviser to the Chinese Ministry of Finance 20
Nowhere, even in Europe, is there greater possibility of future difficulties that may involve the United States in serious friction or even in war than in the Far East. Basic political stability there is of utmost importance to the United States, China, Great Britain and Russia. The principal prerequisite to stability is a broad understanding among the four governments, based on clear and sound principles, and a will to maintain it. Clearly every effort should be made, along with the program of setting up a world security organization, to reach a real accord.
A review of Sino-Russian relations since 1895 shows that serious friction has existed about Manchuria and the Chinese Eastern Railway, leading to the Russo-Japanese war, and thereafter to Sino-Russian fighting in 1929; about Mongolia, Sinkiang and border areas; and is now threatening in relation to the Chinese Communist situation.
The situation will be much complicated if, as is highly probable, Russia joins the war against Japan, and is in occupation of territory recognized by Russia and the other powers to be Chinese (especially Manchuria), before there is a broad understanding among Russia, the United States, Great Britain and China about prospective Far Eastern problems.
Legitimate Russian objectives in the Far East include assurance of ready communications with Eastern Siberia, adequate port and transit facilities, and having no unfriendly government on the Russian border. China, on the other hand, wants little from Russia other than freedom from direct or indirect interference in Chinese internal affairs (except for the question of Outer Mongolia as to which in practice presumably nothing can be done). Also there should be a complete settlement of [Page 859] Sino-Russian frontier questions. The Sino-Russian frontier is the longest land frontier in the world, and an understanding similar to the American-Canadian understanding backed by goodwill on both sides would contribute greatly to future world stability.
In some respects the basic situation parallels that giving rise to the Washington Conference of 1921–22.21 Chinese internal problems are unsettled, and China badly needs an extended period of freedom from pressure or interference by any foreign government with regard to internal affairs. Likewise, the foreign governments should mutually undertake to respect China’s integrity and sovereignty in letter and in spirit, and agree not to utilize the present situation to seek special advantages in China vis-à-vis one another or at China’s expense. In 1922, Russia was conspicuously absent, but this time is very much in the picture. Now Japan will be absent, but should be required in due time to assent to any principles agreed upon by the other powers concerned.
An understanding involves, as of fundamental importance, a settlement of the Chinese Communist question. The danger of Russian support of the Communists, or creation of one or more Russian puppet states on Chinese soil while the United States and Great Britain continue to recognize the Chinese National Government, is obvious. An ideal temporary solution would be a political compromise in China. Whether any form of joint American, British and Russian mediation is practicable could be explored.
Also there is need for an understanding on economic matters. There is danger in the tendency in some American and Chinese quarters to treat the international phase of China’s development as a Sino-American preserve. There should be a clear understanding among the three powers and China about future economic development and investment in China. This might be somewhat on the lines of the old consortium of 1919,22 but with full Chinese participation which was omitted twenty-five years ago. The Bretton Woods International Bank, if created, would be much in the picture. A concrete case requiring co-operation is the Chinese railway problem, in which there is an extensive foreign interest and for whose development China will need substantial foreign help. This help should be drawn from all the countries concerned as a part of a program of administrative and financial unification of the Chinese Railways. The efforts of Secretary Knox to internationalize the Manchurian Railways in 190923 may be recalled.
Also, there should be an understanding whereby Russia receives effective transit and port facilities in Manchuria at fair cost, without [Page 860] discrimination and without paying tariff or transit duties or charges on goods in transit.
Finally there are intergovernmental financial problems in that Russia, along with the United States and Great Britain, is a wartime creditor of China. The three creditor powers ought to follow a common policy in dealing with these advances, having regard to promoting a healthy economic and financial situation. (See Article II of the American Loan Agreement of March 21, 194224).
The Far Eastern situation naturally has to be considered along with other problems involving Russia. Clearly Russia, in order to concentrate on internal reconstruction and development, has a long-time interest in external stability. This involves having good relations among the four powers. On the other hand, there is Russia’s recently growing activity with regard to neighboring states.
In any event, Russia is not entitled to a price involving sacrifice or [of] any legitimate Chinese interest without China’s consent. To do this would be morally unjustified and would sow the seeds of future serious trouble. If Russia joins the war it will be as a matter of national advantage, to have a hand in the settlement, and there should be no need to offer Russia compensation. After all the sacrifices of China and the United States in the war against Japan, it would not be right for Russia to come in at the eleventh hour and claim advantages at the expense of the interests of China and the United States.
The question of possible need for pressure on Russia, e. g., in the field of economic and financial aid, and the extent to which such pressure would be practicable or effective, involve matters outside the scope of this analysis.
- This memorandum is a summary of a 21-page memorandum by Mr. Young dated March 28.↩
- See Foreign Relations, 1922, vol. i, pp. 1 ff.↩
- See ibid., 1919, vol. i, pp. 420 ff.↩
- See ibid., 1910, pp. 231 ff.↩
- Department of State, United States Relations With China (Washington, Government Printing Office, 1949), pp. 510, 512; for documentation, see Foreign Relations, 1942, China, pp. 419 ff.↩