861.77/2603: Telegram
The President of the Technical Board (Stevens) to the Secretary of State
[Received July 9—5 a.m.]
Under the agreement rates for shipment of beans and bean products to Kobe via Dairen and Vladivostok are placed on equality. [Page 904] Kobe is made base for receiving products from North Manchuria. Sea transportation is controlled by the Japanese who can manipulate rates so as to compel most of the export trade to go through Dairen as the Japanese can place their own interpretation on the word “equality” which does not mean the same rates. Eighty percent of the exports before 1914 went through Vladivostok. This percentage dropped to 10 during the war, but with better conditions and the aid of our work export through Vladivostok rose to 70 percent for the past year. As a result the Japanese have been using every means in an effort to destroy the use of the Vladivostok route. Their attempt to secure control of the Ussuri Railway failed. Taking advantage of the desperate financial straits of the Chinese Eastern Railway, by the payment in advance of rebates to the amount of 1,000,000 yen the Japanese obtained an agreement which, by reason of sea routes, places entirely in their hands the control of rates and practically gives them the power to determine the world price of beans. It is the general belief that the big exporters through Vladivostok will be barred from exportation. By the agreement the Chinese Eastern Railway loses all power to fix tariffs on its most important business without Japanese consent. Traffic can be manipulated by the Japanese to fit their plan which is to maintain their commercial predominance in Manchuria. No one country should be permitted to have such power here. The elimination of Vladivostok as a competing port will certainly be a heavy blow economically to Manchuria. The fact that the agreement which practically changed the whole rate structure was made effective in one day [omission] that those concerned were afraid to face advance publicity. No consideration was given to appeals for delay. Imports through Vladivostok will be similarly affected by destruction of export business. I do not hesitate to declare, as a railroad man with practical experience, that by this method the Japanese have gained control of the Chinese Eastern Railway and North Manchuria, the greatest asset, and that Vladivostok has been eliminated. …