prohibition which the British Government appears to have in mind. For its own part, however, this Government would, under existing legislation, find it difficult to obligate itself in the matter without reservation concerning the legal limitations of its competence with regard to the export of aircraft. In this connection, there is enclosed herewith a copy of the Joint Resolution of January 31, 1922,73 and of the Presidential Proclamation of March 4, 1922,74 issued pursuant thereto, under the provisions of which this Government is restraining its citizens from the export of arms and munitions of war to China. As a matter of actual practice, however, I may state that, for a period of over two years, this Government has discouraged (with entire success, as it understands) the exportation of any kind of aircraft to China, since it appears that, at the present time, there is no such thing as commercial aviation in China and that shipments of this character almost invariably are found to fall into the hands of militarists and to be used by them for military purposes.

The suggestion of the American Chargé d'Affaires at Paris, to which you refer, related to an agreement regarding aircraft by all the interested Powers rather than merely by the three Powers named in your notes. In the opinion of this Government, the participation of France in such an agreement is of particular importance; and, should the French Government indicate a willingness to accede to such a proposal, this Government would be glad to join with the British and French Governments in giving immediate effect to an agreement of the nature above indicated and to cooperate in afterward extending its scope so as to include as many as possible of the other Powers whose adherence might be deemed desirable.

I shall be glad if you will inform me of the attitude of the British Government toward such a proposal, and whether it will be disposed to instruct its representative at Paris to cooperate in sounding the French Government with regard thereto. Accept [etc.]

CHARLES E. HUGHES

893.113/787

The Secretary of State to the British Ambassador (Howard)

WASHINGTON, December 24, 1924. EXCELLENCY: With reference to your note No. 1014 of October 29, 1924, concerning the China Arms Embargo Agreement in which you state that the British Government feels that the time is now ripe for

73

See telegram no. 157, June 2, 1922, to the Ambassador in Great Britain, Foreign Relations, 1922, vol. 1, p. 729.

the definite adoption by the signatory Powers of the revised Arms Embargo resolution proposed at the Washington Conference, and of certain portions of the interpretative note recommended by the Diplomatic Body at Peking, I have the honor to inform you that this Government, in its desire to strengthen in every way the effectiveness of the embargo, has given most careful consideration to the suggestion made in your note that it should undertake to make formal proposals to the various governments concerned with a view to the adoption, from January 1, 1925, of the revised Washington Resolution and of at least so much of the interpretative note as the British Government is able to enforce.

With regard to the question of "substantial unanimity" in the adoption of the revised formula, on which this Government originally predicated its readiness to proceed in the matter, it appears that the governments of Norway, The Netherlands, and Brazil have not as yet signified their willingness to adopt the formula in question, and that the Government of Sweden is prepared to do so only in the event that all the other interested Powers adopt the formula and in equal degree with Sweden. It appears, moreover, that although the Danish Government is prepared to adopt the language of the revised Washington Resolution, it is not prepared to adopt the interpretative note, and desires to make the reservation that airplanes be excluded from the scope of the embargo in so far as concerns the regulations governing the prohibition of exportation in Denmark. In this connection, there is quoted the final paragraph of a note on the subject, dated November 17 [6], 1924, from the Danish Ministry of Foreign Affairs to the American Chargé d'Affaires at Copenhagen: 75

"Le Gouvernement Royal serait cependant disposé-sous condition que tous les autres Etats interessés adoptent un procédé analogue à adhérer, en conformité de la recommandation votée par les chefs de mission réunis à Pékin le 9 février 1923, à la résolution présentée à la Conférence de Washington sans interprétation, sous Îa réserve toutefois que les aéronefs ne sont pas compris par les règles concernant la prohibition d'exportation en vigueur en Danemark."

It is the understanding of this Government that the new formula is to be adopted in substitution for the Agreement of May, 1919;7 for it would seem impracticable for the Powers to apply two varying formulae simultaneously. If the new formula were, therefore, to be

adopted at the present time, we should lose the adherence to the embargo of the Netherlands and Brazilian Governments, which are signatory to the Agreement of May, 1919; and we should have, on the part of Denmark, only a qualified adherence of substantially the same character as the 1919 Agreement.

With reference, moreover, to the question of the adoption of the new formula in its entirety, the British Government, as explained in your note under reference, finds itself unable to enforce the portion of the interpretative note relating to machinery destined exclusively for the manufacture of arms or the equipment of arsenals, although it is stated that transactions of this character will continue to be discouraged on the understanding that the other governments concerned do likewise. The situation confronting the British Government in this particular is similar to that in which this Government would find itself with respect to its strict legal authority to prohibit the export of materials and machinery destined exclusively for the manufacture of arms and the equipment of arsenals; although, as a matter of actual practice, this Government has, with a very fair degree of success, discouraged the shipment to China of exports of this character on the part of its nationals. It would seem, however, that, before definitely binding themselves to the new formula, it would be necessary for both the American and British Governments to qualify the acceptance on their part of a very considerable portion of the interpretative note.

From a survey of the actual working of the Agreement of May, 1919, it is the view of this Government that the precise formula in use has been of less importance than the intent and spirit of the various governments concerned in carrying out the Agreement entered into at that time. In spite of the infractions of the embargo which have occurred from time to time, this Government is of the opinion that the embargo has attained a measurable success, and it desires in every way to strengthen its effectiveness. In view, however, of the difficulties apparently to be met at the present time in substituting the revised Washington formula (with the interpretative note) for the Agreement of May, 1919, this Government questions whether any practical benefits would be derived from an attempt to do so until a more complete unanimity can be had among the interested Powers. I need hardly say that I regret that no greater success has thus far attended the efforts which have been made to procure substantial unanimity in this matter. Accept [etc.]

CHARLES E. HUGHES

112731-VOL. I-39- -42

DECISION BY THE CONSORTIUM COUNCIL TO CONTINUE UNMODIFIED THE CONSORTIUM AGREEMENT OF OCTOBER 15, 1920, AFTER ITS EXPIRATION ON OCTOBER 15, 1925 "

893.51/4628

The American Group to the Secretary of State

NEW YORK, June 12, 1924.
[Received June 14.]

SIR: We hand you herewith copy of a memorandum prepared by one of the representatives of the British Group in Peking, in association with the Chairman of the British & Chinese Corporation, Ltd., together with copy of letter of May 23rd from Sir Charles Addis to Mr. C. F. Whigham. This memorandum is submitted to us by the British Group for consideration in advance of a meeting of the Consortium Council arranged to be held in London on July 14th, which will be attended by Mr. Lamont, Chairman of the American Group. We would appreciate very much any expression of opinion the Department may care to make on this memorandum, as of assistance to the American Group in discussing it at the proposed meeting.

We also enclose for the information of the Department a very brief suggestion from our Group of matters to be placed upon the agenda of the meeting.78 If the Department has any suggestions in connection with any of these topics, they will be gratefully received.

Respectfully,

[Enclosure]

J. P. MORGAN & Co.
For the American Group

The Chairman of the British Group (Addis) to Mr. C. F. Whigham, Representative in London of the American Group

LONDON, May 23, 1924.

MY DEAR WHIGHAM: I understand that Mr. Lamont is expected here sometime in July and, if it would suit his convenience, I should propose to convene a meeting of the Consortium Council at this office for Monday, July 28.

As soon as we have agreed the date of the meeting with Lamont I should advise the other groups and invite them to give me as early notice as possible of any items they desire to place on the agenda.

77

For text of the agreement, see Foreign Relations, 1920, vol. I, p. 576. 78 Proposed agenda not printed.

I may take this opportunity of reminding you that the Consortium Agreement, which was for a period of five years, will expire in October, 1925. It may be expedient, therefore, at our meeting to consider in advance what step, if any, should be taken to provide for its renewal. It might take the form, for instance, of a resolution for its renewal without any limit of time, subject to the right of any Group to withdraw on giving six or twelve months' notice. I have taken advantage of the return from China of Major Nathan, C. M. G., who has recently been appointed Chairman of the British and Chinese Corporation, and of the presence of Mayers, to ask them to formulate what in their view constitutes the chief difficulties in the way of industrial progress in China. I enclose an advance copy of the memorandum which they have prepared.

With the permission of my colleagues on the Council I should propose to ask these gentlemen to be present at our meeting in July for the purpose of answering any questions which the Council may wish to put to them. Their proposals, which, it will be noted, involve the elimination of Residuary Participation, are intended to secure greater individual freedom of action on the part of the Peking Representatives of the Consortium.

I reserve the expression of any opinion on the merits of the proposals until their authors have had an opportunity of explaining them to the Council.

As soon as the date of the meeting is fixed I propose to communicate a copy of the Memorandum to each of the other Groups who will, no doubt, wish to discuss this very important matter with their respective Governments.

Yours sincerely,

C. S. ADDIS

[Subenclosure]

Memorandum by Mr. S. F. Mayers, of the British Group in Peking, and Mr. W. S. Nathan, Chairman of the British and Chinese Corporation, Ltd.

LONDON, May 12, 1924.

LACK OF PROGRESS IN RAILWAY CONSTRUCTION

1. It is now two years since the Consortium recorded the view that there was no reason why the development of railways should wait on the solution of China's administrative problems.

2. During these two years the increase of disorder in China and the continued reluctance of the Government to seek assistance from the Consortium have rendered progress impossible.