File No. 892.51/807a.
The Acting Secretary of State to the American Minister.
Washington, March 19, 1912—7 p.m.
After consultation with and subject to analogous action by your British, French and German colleagues you may point out emphatically the bad effect of rushing separate negotiations like the reported Belgian loan pending the very important present negotiations of the four groups, so valuable to the future of China, which may be jeopardized by such short-sighted action, and also pending the pourparlers with Japan and Russia.
As to the suggestion of the groups that the Belgian advances without conditions and therefore inharmonious with the larger plans might well be suppressed by China’s making the four groups (presumably with Russian and Japanese participation) fiscal agents for all foreign loans, you may say to your three colleagues that such fiscal agency might be an excellent solution if the feature of potential monopoly were safeguarded with an undertaking by each group to its own Government to assure fair treatment to other future investors of its own nationality.
Provision might be made to secure to the groups fair treatment without giving them a monopoly to the exclusion of other legitimate lenders with whom they might be unwilling to combine, by an undertaking from China to the groups not to negotiate any subsequent loan that might conflict with the legitimate interests or weaken the security of the large loan, if consummated, which is at present being [Page 116] negotiated by the combined groups with the approval of their Governments, or of loans hitherto negotiated.
It may be worth considering whether the Chinese Government should not at the same time be requested also to engage with the respective Governments not to negotiate any large loan except with the combined banking groups and their associates, or with corresponding groups of the same nationalities and upon the same broad principles of internationalization. You may discuss this question as your own idea with your colleagues and with Yuan Shih-kai and Tong Shao-yi, pointing out to the latter the advantages to China’s future welfare of some such arrangement, which would tend to obliterate preferential political rights and thus forestall any purely political loan being forced upon China by any individual power.
[Repeated to embassy at Paris, with instructions to repeat to embassies at London and Berlin.]