pendent policy pursued by the United States at this time would result in competition with other governments and would endanger the successful formation of the international group as proposed. Consequently it is the policy of this Government at this time not to take any such action but to await the agreement of the other governments to the proposed plan and to do all in its power to expedite such agreement. The matter is being pressed in Washington through the representatives here of the various governments mentioned. The currency reform and reconstruction loans are included under the general terms as proposed by the United States to the other Governments.. Such matters as the demobilization of troops and the formation of a military police force may demand consideration in the near future as a result of the progress towards reconcilation, but it is felt that any such assistance should be restricted to the immediate needs and should be entirely consistent with the larger comprehensive plans under consideration. The Department will accordingly recommend to the American group that it meet the request of the representatives of the British and French groups as transmitted in your November 8, 5 p. m., by sending a representative to Peking for the purpose of obtaining information and advising as to the measures to be taken to meet conditions as they arise. 1 POLK RAILWAY CONCESSIONS 2 Proposed Elimination of German Interests from the Hukuang Railway Enterprise; Protest of Great Britain against the Siems-Carey & Co. Contract; Temporary Cessation of Railway Surveys under the Siems-Carey & Co. Contract; Concession to the Japanese Industrial Development Bank for a Railway from Kirin to Hueining; Concessions to Japan in Manchuria, Mongolia, and Shantung File No. 893.77/1656 The French Ambassador (Jusserand) to the Secretary of State [Translation] WASHINGTON, February 5, 1918. MR. SECRETARY OF STATE: The attention of the Government of the Republic has been drawn to the advantage that could be taken of existing circumstances in recasting the agreements that now bind the Allied financial groups with regard to the Hukuang lines so as to eliminate the German group. These agreements for which there is a historic explanation are irksome to all and a never-ending source of conflicts. The French group represented by the Banque de l'Indo-Chine thinks it would be beneficial to start them anew on entirely different bases and that by heeding the lessons of past experience an agreement may be arrived at that is likely to live and will be acceptable to the Chinese besides securing the future of the lines. 1Not printed. 2 Continued from Foreign Relations, 1917, pp. 160–207. The representative of the French group broached the question to his American colleague who coincides in his views and drew up on the subject favorable recommendations that are no doubt known to his Government. The English representative likewise thinks it necessary to perfect a new agreement before the end of the war, and has also made his opinion known in London. Under these condi- . tions it seems that the negotiations which were begun in 1914 on the subject can be resumed at once and speedily carried to a successful conclusion. But before taking active steps in these new negotiations the financial groups would like to have the three Governments concerned agree on the principle. The initiative of the French group meets with the full approval of the Government of the Republic which wishes me to draw your excellency's attention to the great interest which attaches to taking away from our enemy the power to resume his place in the former Hukuang agreement at the end of the hostilities. Mr. Pichon would be glad if your excellency could find it possible to concur in this opinion and advise the American group that you would countenance negotiations in that direction with the French and English groups. Be pleased [etc.] JUSSERAND The Secretary of State to the French Ambassador (Jusserand) No. 2069 WASHINGTON, February 15, 1918. EXCELLENCY: I have the honor to acknowledge the receipt of your excellency's note of the 5th instant communicating the views of your Government in support of the proposals of the French and British groups concerned that the Hukuang Railway agreements should be recast in such a manner as to eliminate the German group from further interest therein. I shall be glad to have you say to your Government that its suggestions will have my very careful consideration, and that as soon as a decision is reached in regard to the matter I shall have pleasure in communicating it through your excellency. Accept [etc.] ROBERT LANSING File No. 893.77/1667 The Minister in China (Reinsch) to the Secretary of State No. 2142 PEKING, June 29, 1918. SIR: In connection with my despatch No. 1736 of November 1917,1 relating to the protest of the British Government against the proposed construction by an American corporation of certain railways in the Provinces of Hupeh and Hunan, I now have the honor to enclose a translation of a note from the Ministry for Foreign Affairs to the British Minister under date of June 21, 1918, in answer to said British protest. It will be seen the essential point in the answer 'Foreign Relations, 1917, p. 204. of the Chinese Government is that, as the main agreement to which the letter of the Hukuang Viceroy refers has now no force, by the terms of the agreement itself, the letter which was an addendum thereto has also ceased to have force. I have [etc.] [Enclosure Translation] PAUL S. REINSCH The Chinese Minister for Foreign Affairs (Lu Cheng-hsiang) to the British Minister (Jordan) June 21, 1918. EXCELLENCY: I had the honor to receive a note from Mr. B. F. Alston, Chargé d'Affaires, in which he stated that the railways included in the agreement between the Chinese Government and American merchants, the International Corporation, were an encroachment on the railways specified in the Hu-HangYung (Shanghai-Hangchow-Ningpo) Railway agreement, and also were inconsistent with the note formerly given by the Hukuang Viceroy to the British Consul at Hankow. This Ministry has referred the matter to the Ministry of Communications with instructions to investigate carefully. That Ministry now replies as follows: 1. Regarding the claim based on the Hu-Hang-Yung agreement, in the 19th article of the said agreement it is specifically stated that the agreement includes the construction of branch roads. The Wen-Hang (Wenchow to Hangchow) Railway is a main line of the Chinese system, in length 400 to 500 li, and cannot be considered a branch road of the Hu-Hang-Yung line. Since this road cannot be considered a branch line of the Hu-HangYung Railway, Article 19 of the agreement can have no reference to it. 2. With reference to the note formerly given the British Consul at Hankow by the Hukuang Viceroy, it is clearly stated in Article 2 of the Hongkong agreement that when the capital and interest have been paid the agreement shall be canceled. The note referred to was an addendum to the said agreement. The capital and interest specified in the agreement have long been paid and so the agreement has now no force, so any addendum to the agreement has also ceased to have force. As in duty bound we send to your excellency the report of the Ministry of Communications. [File copy not signed] File No. 893.77/1671 The Chargé in China (MacMurray) to the Secretary of State No. 2148 [Extract] PEKING, July 13, 1918. SIR: I have the honor to enclose herewith a translation (from the official Chinese text as published in the Government Gazette of the 29th ultimo) of the contract concluded on June 18 last between the Chinese Government and the Japanese Industrial Development Bank acting on its own behalf and that of the Chosen and Taiwan Banks, for a loan for the construction of a railway from Kirin to Hueining (believed to be identical with the place given as Hoiryong on some maps) on the Korean side of the Tumen River. There is also enclosed a translation, as printed in the Peking Times of the 2d instant, of the official statement on the subject of this loan, made by Mr. Ts'ao Ju-lin, Minister of Communications.1 'Not printed In commenting upon the terms of this loan it should be stated that the Ssupingkai-Chengchiatun Railway contract, to which reference is made in Article 6 of this agreement, is to be identified with the contract of December 27, 1915, of which a copy was forwarded to the Department with the Legation's despatch (No. 1331) of January 3, 1917. The Tientsin-Pukow agreement, to which reference is made in Article 7, is that of January 13, 1908, the text of which is printed at page 61 of the 1908 supplement to Rockhill's Treaties. J. V. A. MACMURRAY I have [etc.] [Enclosure Translation] The Kirin-Hueining (Ki-or Chi-Huei) Railway loan: Preliminary agreement' For the purpose of constructing the railway from Kirin in the Republic of China [to] Hueining through the southern part of Yenki and the Tumen River the Government of the Republic of China (hereafter called A) hereby enters into the present preliminary agreement with the three Japanese banks, the Japanese Industrial Development Bank, the Chosen Bank and the Taiwan Bank, represented by the Industrial Development Bank (hereafter called B) as the basis of a formal loan agreement for the same railway: ARTICLE 1 A shall with due promptness outline the amount of funds required for the construction of the railway and other items of necessary expenditure and bring it to the notice of B for its consent. In accordance with the amount of funds required as referred to above, B shall issue 5 per cent public loan bonds of the Republican Government of China in gold currency for A. ARTICLE 2 The period for the redemption of the present loan shall be limited to forty years. Redemption of the loan shall begin from the eleventh year calculating from the date of the issue of the bonds and the method of yearly instalment redemption shall be followed. ARTICLE 3 As soon as the formal agreement for the Ki-Huei Railway loan is signed, A shall begin to construct the line so as to hasten its completion. ARTICLE 4 A shall build the railway bridge over the Tumen River conjointly with the railway department of the office of the Japanese Governor General for Korea and shall share half of the expenses thereof. Regarding the through traffic between this railway and the railway in Korea, a separate agreement shall be entered into with a view to developing the traffic and securing the smooth cooperation of the two railways concerned. ARTICLE 5 A shall pledge the following assets to B as security for payment of interest and redemption of the present loan bonds: All the property owned by and the revenue due to the railway either at present or in the future. Without the approval of B, A shall not offer either the property or the revenue of the railway to others as loan security. Foreign Relations, 1917, p. 161. 'Extract from the Government Gazette of June 29, 1928. ARTICLE 6 The actual amount of funds to be received by A out of the issue of the present loan bonds shall be such as to be more profitable to A than what is stipulated in the Ssupingkai-Chengchiatun Railway loan agreement concluded on December 17 of the 4th year of the Republic.' The rate at which the present loan bonds are to be issued shall be fixed according to the circumstances under which they are issued. ARTICLE 7 Regarding the particulars which are not provided for under the foregoing articles they shall be decided upon by A and B in accordance with the TientsinPukow Railway loan agreement signed on the 10th of the 12th moon of the 33d year of Kuanghsü. ARTICLE 8 The present preliminary agreement shall be the basis of the formal agreement for the Ki-Huei Railway loan, which shall be concluded within six months after the conclusion of the present preliminary agreement. ARTICLE 9 Upon the conclusion of the present preliminary agreement, B shall pay to A an advance of $10,000,000 in full without any deduction for commission. ARTICLE 10 The advance referred to above shall bear 71⁄2 per cent interest per annum; that is, 71⁄2 yen 'shall be paid for the yearly interest of every 100 yen. ARTICLE 11 The advance shall be paid to A in specie in exchange for the Treasury bonds issued by A. ARTICLE 12 The Treasury notes mentioned in the foregoing article shall be subject to change every six months. At each occasion of their change for new ones, the interest due for the said period shall be paid to B. ARTICLE 13 After the conclusion of the formal agreement for the Ki-Huei Railway loan, the advance shall have the preferential right of being repaid with the proceeds from the issue of the loan bonds referred to above. ARTICLE 14 The payment of the advance, its redemption and the payment of its interest and other transactions in connection therewith shall be carried out at Tokyo. Two copies of the present preliminary agreement shall be written in the Chinese language and two copies in the Japanese language and A and B shall each keep one copy written in each language. In case any dispute arises with regard to the interpretation of the agreement, the text of the one written in Japanese shall be considered as authoritative. TS'AO JU-LIN, [Minister of Communications, For the Chinese Government TU-FANG-CHIN-CHENG (MAKAWA?), President of the Hsing |