File No. 893.51/1220.

The American Chargé d’Affaires at London to the Secretary of State.


The following urgent memorandum from the Minister for Foreign Affairs just received. I respectfully request an early expression of your views since I am informed that a meeting of the representatives of the six groups is to take place here in a few days.


The British Foreign Office to the American Embassy.

The United States Government are aware that at a meeting of the representatives six international financial groups held in London December 13–14, 1912, a draft agreement for a loan to the Chinese Government of £25,000,000 for reorganization purposes was considered.

In connection with the preference as suggested by the Chinese Minister of Finance with respect to the price on definite industrial enterprises to be specified for under Article 17, it was proposed by the groups to eliminate industrial loans from this clause of the draft agreement and to claim a preference merely for Government financial loans until the purposes contemplated under Article 2 of the agreement are completed. With this object in view it was further suggested that in addition to a general preference clause as in former agreements the following should be inserted:

After the issue of the present loan of £25,000,000 and for a period of two years, should the Chinese Government proceed to issue a supplementing loan for the purposes specified in Article 2 of this agreement, or of other Government financial loans, a preferential right is granted to the six groups at blank per cent under the average price of the present loan, and this preference shall apply even for a further period as regards future loans secured on the salt gabelle. In any case, the Chinese Government will not, for a period of six months after the issue of the present loan, proceed with the issue of any other Government loan, or industrial loan with the guarantee of the Chinese Government, without the consent of the six groups.

In reply to these proposals the groups’ agents in Peking reported that the Minister of Finance objected to any time limit, but was prepared to accept the following article:

In the event of the Chinese Government desiring to issue further loans secured on the salt revenue or a supplementary loan for purposes of the nature specified in Article 2, preference will be given to the banks on the same terms of commission as those of the present agreement. The Chinese Government further undertake, for a period of six months after the issue of the present loan, not to issue any other loan concluded later than December 1, 1912, without previous agreement with the banks.

This stipulation would, however, admit the issue of the loan provided for in the agreement signed at Peking on September 24, 1912, for the construction [Page 146] by a Belgian company of a railway from Lanchow to Haicbow.1 This loan was to be for an amount of £10,000,000, a sum which would doubtless not be forthcoming from Belgium and would therefore have to be obtained, at any rate in part, elsewhere. It would seem unfair that any one of the powers of the sextuple group should profit by the abstention of the rest, and it would seem reasonable that there should be some understanding amongst the six allied powers with regard to a concession which was the direct outcome of the policy they have pursued in common since their declaration of the ninth July last year.

His Majesty’s Government would therefore propose that the six Governments should pledge themselves to refuse their support to any of their nationals who might propose to finance this loan. This would probably in practice entail the cancellation of the contract and its internationalization by its being handed over to the groups on payment of compensation.

  1. Officially known as “The £10,000,000 sterling five per cent gold loan of 1913 of the Government of the Chinese Republic for the Lung-Tsing-U-Hai Railway”; the construction company is the Companic Generale de Chemins de Fer et de Tramways en Chine. For text of agreement see File No. 893.51/1419.