Statement given to the press.
Washington, January 6, 1910.
In reply to an inquiry as to the truth of the St. Petersburg report relating to the neutralization of railways in Manchuria, the Secretary of State to-day said:
The proposition of the United States to the interested powers looking to the neutralization of the Manchurian railroads discloses the end toward which American policy in the Far East has been recently directed.
Late in May last this Government learned that an understanding had been reached between important British, French, and German financial groups, supported by their Governments, by which they were to furnish funds for the construction of two great railways in China. This Government, believing that sympathetic cooperation between the Governments most vitally interested would best subserve the policies of maintenance of Chinese political integrity and equality of commercial opportunity, suggested that American cooperation with the powerful international financial group already formed would be useful to further the policies to which all were alike pledged.
This Government pointed out that the greatest danger at present in China to the open door and the development of foreign trade arose from disagreements among the great western nations, and expressed the opinion that nothing would afford so impressive an object lesson to China and the world as the sight of the four great capitalist nations—Great Britain, Germany, France, and the United States—standing together for equality of commercial opportunity.
[Page 244]Owing to the strong opposition that had developed in certain official quarters in China and elsewhere, the President, in July last, felt warranted in resorting to the somewhat unusual method of communicating directly with His Imperial Highness Prince Chun, regent of the Chinese Empire, informing the latter that he was greatly disturbed at the reports of certain prejudiced opposition to the Chinese Government’s arranging for equal participation by American capital in the Hukuang loan. The President pointed out that the wishes of the United States were based upon broad national and impersonal principles of equity and good policy, in which a due regard for the best interests of China had a prominent part. He reasserted his intense personal interest in making the use of American capital in the development of China an instrument in the promotion of China’s welfare and an increase in her material prosperity without entanglements or embarrassments that might affect the growth of her independent political power and the preservation of her territorial integrity.
As a result of this communication, an agreement was soon reached with the Chinese Government that American bankers should take one-fourth of the total loan and that Americans and American materials should have all the same rights, privileges, preferences, and discretions for all present and prospective lines that were reserved to the British, German, and French nationals and materials under the terms of their original agreement, except only the right to appoint chief engineers for the two sections about to be placed under contract. As to the latter point, China gave assurance that American engineers would be employed upon the engineering corps of both roads and that the present waiving of America’s right to chief engineers would in no way prejudice its rights in that regard when future extensions should be constructed. After several months of continuous negotiation, the right to such American all-around equal participation has been acknowledged and a final settlement on this basis has been all but completed.
The grounds for this energetic action on the part of the United States Government have not been generally understood. Railroad loans floated by China have in the East generally been given an imperial guaranty and secured by first mortgages on the lines constructed or by pledging provincial revenues as security. The proposed hypothecation of China’s internal revenues for a loan was therefore regarded as involving important political considerations. The fact that the loan was to carry an imperial guaranty and be secured on the internal revenues made it of the greatest importance that the United States should participate therein in order that this Government might be in a position as an interested party to exercise an influence equal to that of any of the other three powers in any question arising through the pledging of China’s national resources, and to enable the United States, moreover, at the proper time again to support China in urgent and desirable fiscal administrative reforms, such as the abolition of likin, the revision of the customs tariff, and general fiscal and monetary rehabilitation.
There were, however, stronger reasons and broader grounds. In fact, the action of the Government in respect to the pending loan was but the first step in a new phase of the traditional policy of the United States in China and with special reference to Manchuria. As is well known, the essential principles of the Hay policy of the open door are the preservation of the territorial and jurisdictional integrity of the Chinese Empire and equal commercial opportunity in China for all nations. This Government believes that one of the most effective, if not the most effective, way to secure for China the undisturbed enjoyment of all political rights in Manchuria and to promote the normal development of the eastern provinces under the policy of the open door practically applied would be to take the railroads of Manchuria out of eastern politics and place them under an economic and impartial administration by vesting in China the ownership of its railroads; the funds for that purpose to be furnished by the nationals of such interested powers as might be willing to participate and who are pledged to the policy of the open door and equal opportunity, the powers participating to operate the railway system during the period of the loan and enjoy the usual preferences in supplying materials.
Such a policy would naturally require for its execution the cooperation not only of China, but also of Japan and of Russia, who already have extensive railway rights in Manchuria. The advantages of such a plan are obvious. It would insure unimpaired Chinese sovereignty, the commercial and industrial development of the Manchurian provinces, and furnish a substantial reason for the early solution of the problems of fiscal and monetary reform which are now receiving such earnest attention by the Chinese Government. It would afford an opportunity for both Russia and Japan to shift their onerous duties, responsibilities, and expenses in connection with these railways to the shoulders of the combined powers, including themselves. Such a policy, moreover, would effect a complete commercial neutralization of Manchuria, and in so doing [Page 245] make a large contribution to the peace of the world by converting the provinces of Manchuria into an immense commercial neutral zone.
The recent signature of an ad referendum agreement between a representative of the Chinese Government and the financial representatives of the United States and Great Britain to finance and construct a railway line from Chinchow to Aigun gave the United States an opportunity to lay this proposal before the Government of Great Britain for its consideration, and it is gratifying to be able to state that the project has already received the approval in principle of that Government. There are reasons to believe that such a plan might also meet with like favorable consideration on the part of Russia. Germany and China cordially approve the American suggestion, and certain press reports from Japan indicate that the project may likewise be received with favor by that country. For instance, a recent article on the subject in the Japan Mail ends with these significant words:
“One can not conceal from oneself the fact that if all the railways forming part of the system which connects the west with the Far East were converted into a neutral estate a great contribution will be made to the peace of the world.”