The Secretary of State to Ambassador O’Brien.

[Telegram—Paraphrase.]

Mr. Knox informs Mr. O’Brien that the department desires the plan for the neutralization of the railways in Manchuria, proposed in its telegram of November 6, to be considered entirely upon its merits and would greatly regret to have the decision of the Japanese Government, when ultimately reached, influenced by any misunderstanding as to the nature of the proposal or the motive in making it, and that the department does not believe that the uninformed expressions of a portion of the Japanese press that were recently being reproduced in the American papers in any way reflect the attitude of the Japanese Government, which has so often and so clearly been defined in formal engagements.

Mr. Knox outlines the reason for the proposal as follows, saying that this Government was asked by some American bankers diplomatically to support their contract for a railway from Chinchow to Aigun to be built by a British firm of contractors with British and American capital; and that the Department of State indicated a disposition to give favorable consideration to such a project provided Great Britain would give similar support, and provided also the other interested powers pledged to the policy of equal opportunity should be invited to participate:

Mr. Knox says that since it appeared that Russian and Japanese railway properties in Manchuria would be somewhat affected by the construction of the projected railway, this Government decided, before going further, to inquire as to the feasibility of avoiding a conflict of interests by combining the existing Manchurian railroads into one system, the funds for that purpose to be raised by the interested powers; that it was suggested if such a plan was thought not to be feasible as to all the existing roads, then it might be applied to part, or that future roads might be built through the cooperation of the powers concerned; and that the suggestion that China itself should now repurchase the existing roads in the event of that suggestion being acceptable to those in present possession as concessionaires was made because China is entitled to acquire those roads at the end of the term of the concessions under which they were built.

Mr. Knox says that Great Britain having signified its approval of the general principle involved in the larger plan, as well as of the Chinchow-Aigun project, the alternative proposals were simultaneously laid before the other governments most directly interested; that this Government does not anticipate that any of the powers associated [Page 247] with it in maintaining the policy of equal opportunity in China will fail correctly to interpret and appreciate either of these suggestions, and that so long as this Government has the unretracted solemn assurances of its associates in that policy that the policy is receiving their cordial and loyal support, it wall naturally regard it the duty to bring to the attention of its associates any fair proposition directly bearing upon the immediate purposes of that policy and likely, in its judgment, to affect it favorably.

Mr. Knox points out that this Government gives full credence to the assurances of other governments and regulates its actions accordingly, and that the American policy of desiring cooperation in the construction of Chinese railways rests upon the recognition of the direct relation between the obligation of the pledge of the powers to sustain Chinese sovereignty and maintain equal opportunity and the privilege of participation in Chinese development and commerce.

He says that it is hardly to be supposed, and is not supposed by this Government, in view of its historic relations to the accepted policies in respect to China, that there should be expected on its part any hesitations in making suggestions for their more effective advancement presented in good faith and resting exclusively for their consideration on such merit as they may disclose.

Mr. Knox says the South Manchurian Railway was acquired from Russia as one of the results of the Treaty of Portsmouth, and that in this treaty, article 7, Japan and Russia agreed to exploit their respective railways in Manchuria exclusively for commercial and industrial purposes, and in nowise for strategic purposes. Mr. Knox refers to the exchange of notes of November 30, 1908, between Baron Takahira and Mr. Root, in which Japan and the United States declare:

They are also determined to preserve the common interest of all powers in China by supporting by all pacific means at their disposal the independence and integrity of China and the principle of equal opportunity for commerce and industry of all nations in that Empire.

He says that the suggestion of the United States, therefore, relates to the highways of commerce now in the possession of Russia and Japan as concessionaires, and that they themselves have declared these to be devoted exclusively to commercial purposes, and that the transfer of that portion of the railroad acquired by Japan under the treaty from Russia was assented to by China on this understanding. He says the proposition of the United States would seem to be a proper and effective means for the advancement of the common commercial interests of the powers in China if it has the merit its originators believe. He points out that the suggestion is predicated entirely upon the theory that a more economic, practical, and successful operation of the Manchurian railways, which have a direct relation to the commercial and industrial development of Manchuria, might be accomplished by such a combination as suggested, in which all the interested powers would participate, than under the arrangement that now exists.

Mr. Knox adds that so far from being an unfriendly proposal, this Government sincerely believes that Japan would not only retain all the present and prospective commercial and industrial advantages in Manchuria that it now has, including a proportional investment quite commensurate with its present railroad holdings, but would also receive other substantial benefits for an assured condition of peace if the plan were adopted in its entirety by all the powers concerned.

[Page 248]

Mr. Knox informs Mr. O’Brien that while the above is intended primarily for his own information, he may in his conversations with members of the foreign office make such use of the ideas set forth as he may deem necessary to secure the fullest understanding and consideration of the subject.