8. In the first place, it is only fit that the United States Government should be informed of the motives actuating the formation of the Chinese National Wireless Telegraph Company. That company was formed for the genuine purpose of assisting the Chinese Government in their desire to develop wireless communications in China by the manufacture of the necessary equipment in China by Chinese. Lacking the requisite experience, the Chinese Government turned to the Marconi Company, and formed with them the Chinese National Wireless Telegraph Company, which is intenlel to function only until such time as, with factory duly established and experience gained, the Chinese Government are themselves in a position to buy out the Marconi Company and stand their own feet.
upon
His Majesty's Government are not aware of any ground upon which the propriety of such an arrangement can be challenged.
9. Mr. Devis declares that no Government can rightfully assert on behalf of its nationals a claim to exercise any such monopoly or preference as would debar United States citizens from the right to contract freely with the Chinese Government for any category of supplies. With due deference, this hardly seems to His Majesty's Govern. ment to be an accurate presentation of the issue. Is not the question rather whether there is any reason why the Chinese Government should not, if they so desire, enter into an agreement with a company by which the Government undertake for a period of twenty years to obtain all their requirements in wireless telegraph and telephone apparatus, material and supplies from that particular source, provided the terms offered are not worse than those obtainable elsewhere? If, as His Majesty's Government contend, there is no such reason, and the Chinese Government, having entered into an agreement of the above nature, then proceed to enter into a second agreement which violates the first, is not the Government concerned clearly entitled, and even bound, to intervene with the Chinese Government for the protection of the contractual rights of its nationals?
10. In the present instance, His Majesty's Government, after the most careful scrutiny, can see no legitimate objection to the preferential rights enjoyed by the Chinese National Wireless Telegraph Company under their agreement with the Chinese Government. Any contract for the supply of goods must imply a preference in favour of the contractor, in so far as he has secured the contract over others; should all preference of this nature be debarrel, commere generally would become impossible. Such preferences are indeed the essential concomitants of trade.
<
11. The question thus narrows itself down to whether in this particular instance the preference" of which the United States Government complain amounts to a "monopoly," and His Majesty's Government are of opinion that it does not.
12. A monopoly in the ordinary sense may be defined as a right by which one person or body becomes the sole medium through which a particular commodity can be marketed in a given area.
This definition is evidently inapplicable in the present case. In the first place, the contract with the Chinese National Wireless Telegraph Company only covers purchases by the Chinese Government, and does not apply to any supplies which may be required by other Governments, institutions or individuals who may operate wireless telegraphy in China; and, in the second place, the right which the Chinese National Wireless Telegraph Company enjoy under their agreement of the 24th May, 1919, is explicitly dependent upon their offers being at least as good as those of any competitors. The United States Government will hardly wish to deny that such a provision is wholly inconsistent with the idea of a monopoly, to which the objection is that the monopolist is the only possible seller or purchaser, as the case may be, thus eliminating all possibility of competition.
13. No Government can look to obtain advantageous terms for the supply of goods from contractors for public utilities unless the interests of the contractor are clearly safeguarded. It is not unnatural in such cases to insert a proviso securing to the contractors advantages without which they might not be prepared to sink capital in such undertakings. The grant of preferential rights on such occasions acts at once in the general interest of the public and in that of the contractor, and thus tends to encourage development and progress.
14. It is not inappusite to record here that in connection with the very case which the United States Government cite in support of their arguments that of the China Electric Company, a Sino-Japanese-American concern-precisely the same point was After a careful consideration most carefully studied by His Majesty's Government.
of existing treaty provisions in China. it appeared to His Majesty's Government that the rights of that company did not conflict with the anti-monopolistic clauses of the treaties and could not be objected to on other grounds. Consequently, although His
i
3
Majesty's Government were at that time unaware that the United States Government had disavowed the preferential rights of the China Electric Company-a point upon which Mr. Davis lays such stress in his memorandum under reply His Majesty's Government nevertheless refrained purposely from questioning the rights of the China Electric Company either overtly or covertly.
15. In the present case, where the preferential rights of the Chinese National Wireless Telegraph Company appear to be much the same. His Majesty's Government see no reason to depart from the conclusions which they reached after due deliberation with regard to the China Electric Company.
16. Having thus considered the question of principle, allusion must be made to certain further points in Mr. Davis's memorandum. In the first place, the United States Government would appear to intimate that, if His Majesty's Government do not abandon the attitude they have taken up, the United States Government will be obliged to consider the revival of the rights of the China Electric Company under their 1917 agreement, and thus seek to invalidate the three Marconi agreements of the 27th August, 1918, of the 9th October, 1918, and of the 24th May, 1919.
17. The China Electric Company's agreement refers to telegraphy and telephony, and makes no mention of wireless apparatus. Under article 11 (a) of the contract in question the Chinese Government undertake to place with the China Electric Company such orders for machinery, apparatus or other materials in connection with the telephone and telegraph system as the company is in a position to fill in the time to be agreed upon. As, according to the information of His Majesty's Government, neither the China Electric Company nor its Japanese affiliated company, the Nippon Electric Company, makes any pretence of manufacturing wireless apparatus, the application of this clause of the agreement to the supply of wireless apparatus to the Chinese Govern- ment can hardly have been contemplated; and this view is strengthened by the fact that the Chiua Electric Company has even negotiated with the Chinese National Wireless Telegraph Company for the purchase of wireless equipment. It would in fact be patent to the world that, if the United States Government were to claim at this date that the China Electric Company's agreement extends to wireless supplies, this claim was being deliberately made for the first time in order to block the rights of the subjects of a friendly Power. His Majesty's Government decline to believe that the United States Government can seriously contemplate such a step.
18. A further point in Mr. Davis's memorandum which seems prima facie obscure, but which is doubtless susceptible of simple explanation, is the fact that, though the China Electric Company's agreement was, according to Mr. Davis's statement, signed as long ago as the 20th October, 1917, yet it was not until the 28th January, 1919, that the United States Government formally notified the company and the Chinese Govern- ment that they would not recognise or support the preferential rights conferred there- under. In view of the negotiations then in progress with the Marconi Company, it is unfortunate that the disavowal after the long period of fifteen months, which is now for the first time revealed in Mr. Davis's memorandum of the 15th February, 1921, was not disclosed earlier. Such a disclosure might well have had a bearing upon the negotiations then in progress between the Chinese Government and the Marconi Company.
1t
19. Like the United States Government, His Majesty's Government attach the greatest importance to Anglo-American co-operation in the Far East, where the principles animating British and United States policy are fundamentally the same. would be a matter of infinite regret were the conflict which has occurred between British and United States wireless interests in China to mar the prospects of such But the United States co-operation between the nationals of the two countries. Government will realise that where legitimate vested British interests are at stake His Majesty's Government would, in existing circumstances, be failing in their duty did they not firmly support these interests when challenged, from however friendly a quarter the challenge may come.
Under
20. There is yet a further aspect of this question to which His Majesty's Govern- ment deem it right to invite the attention of the United States Government, the agreement of the 12th September, 1911, by which the Poulsen Wireless Corporation acquired their rights in the Poulseu patents from the vendors, Messrs. Pedersen, Poulsen and Blechinberg, they became bound by certain definite obligations. Unier clause 10 of that agreement the Poulsen Wireless Corporation agree that "the vendors shall have the exclusive right to make use and sell each and all inventions, improvements and discoveries now belonging to, or that in future shall belong to said corporation, relating to any subject treated of in any of said patents, or relating to any use of which any of said inventions are capable, for and in all countries, outside of United States,
548
No comments yet.
Private notes are available after approval.