893.74/313: Telegram

The Secretary of State to the Minister in China ( Schurman )

[Paraphrase]

103. For the information of the Minister and to be discussed confidentially with Mr. Schwerin.

It is a matter of great regret that on account of unavoidable delays incidental to giving consideration to the Federal contract, the Department has not undertaken to inform you currently of the position of affairs, with regard to questions influencing the matter, in such a way that such misconception as seems to be represented by the Legation’s telegram No. 204 of June 7 would have been obviated.

Because of persistent delays by the Chinese Government I have been considering for some time the possibility of alternative procedure in case the Chinese Government’s passive attitude should, under circumstances which constitute an absolute bar to progress in the matter, be continued. Apparently the definite refusal of the Japanese Government to discontinue its support of the Mitsui claim to a wireless monopoly was a significant coincidence with the British Government’s very persistent effort to secure a statement of the American Government’s position regarding the recommendations drawn up by the American, British, French and Japanese radio experts on February 4, 1922, with regard to wireless activities in China and which those experts submitted for approval to their respective Governments.12 You are being informed in a separate telegram of the text of these recommendations. They have, so far as this Government knows, received only the British Government’s formal approval. The formation of what may be denominated a radio consortium for China is the apparent object to which their general purport looks. The British, French and Japanese wireless interests would comprise this consortium, with the maintenance by the American interests of a separate entity, the purpose of which would be direct Chinese-American communications, but taking cognizance, for the purpose of necessary traffic and other working arrangements, of the other organizations.

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Although my strong preference would be, if only for the tactical advantage it would give in arranging for such working agreements as would later be necessary with the other national interests, to have the arrangements under the Federal agreement independently executed, the possibility has been receiving my consideration of bringing about substantially the same result through an arrangement among the American, British, French and Japanese radio interests employing as a foundation the experts’ recommendations which look to reserving the Chinese-American field for our interests to be developed through the concession granted the Federal company. The difference is tactical rather than essential between the two methods.

I have also considered, if concerted action among foreign interests with respect to radio in China is still opposed by the Chinese Government, the possibility of stimulating China to action on the Federal agreement as an independent project by presenting the prospect of cooperation with a British-French-Japanese radio consortium as an alternative which must be considered by us in case Chinese cooperation under the Federal agreement is persistently withheld.

The Department has discussed these suggestions tentatively with General Harbord in order to learn whether the Radio Corporation would be ready to do its part, if necessity should arise, with regard to the proposed alternative method. The corporation is still considering the matter and on June 13 its representatives are to consult with the Department further.

There is a third possibility, viz, that the American Government should show its willingness, in response to the British Embassy’s insistent solicitations, to have the American radio interests join with the other three national radio interests on the basis of the recommendations of the experts, the arrangement to be conditional upon assurances that no preferential or monopolistic rights should be asserted in regard thereto, and that all opposition should be withdrawn to the carrying out of the Federal contract.

The Department will be pleased to receive, by June 13th if possible, a statement of your and Mr. Schwerin’s views regarding the proposed alternatives to the effort which is being made at present to secure the fulfillment, without reference to the interests of other nationalities, by the Chinese Government of the Federal Telegraph agreement as an independent project.

It is my hope that Mr. Schwerin, whose position is fully appreciated in the matter, will find it possible to approve my dealing with it according to one of the three alternative methods I have here outlined, in the event it should appear impossible to overcome the Chinese Government’s inertia.

Hughes