File No. 893.51/1366.

The American Group to the Secretary of State.

Sir: We have the honor to acknowledge receipt of your letter of the 28th, in reply to ours of the 19th of March. In deference to the President’s suggestion we are forwarding today to Messrs. Morgan, Grenfell & Company a cable, a copy of which is enclosed, stating that the American group is willing to accede to the request of the Chinese Minister of Finance that an extension of six months at 7½% interest per annum be granted upon the Treasury bills which became due on February 28th and March 9th, respectively.

It is our wish in so far as consistent with the principles of sound business to conform to the wishes of our Government. But we would emphasize the fact pointed out in our letter of March 19th that these advances, which the Chinese Government intended to repay from the proceeds of the reorganization loan, were made by the American group jointly with the British, French, German, Russian and Japanese groups.

While, therefore, we ourselves are willing, in deference to the President’s wishes, to agree to an extension of the term of these obligations, we do not feel free in this matter to act independently of our former colleagues, nor, having withdrawn from these negotiations, are we in a position to press them to grant the accommodation which we ourselves are willing to extend.

In your letter under acknowledgment you observe that the Chinese Government offers 7½% interest per annum if the extension of the term of these Treasury bills be granted, or 2% more than the interest agreed upon for the large loan. We would call your attention, [Page 177] however, to the fact that the interest of 5½% was to be paid on a loan the term of which is fifty years, evidenced by bonds which we as bankers would of course expect to sell to the public, while the interest of 7½% is offered upon short term Treasury bills already overdue, and as to the repayment of which, as shown by the telegram from Peking, transmitted to you with our letter of March 19th, the Chinese Government has now no definite plan.

Very truly yours,

Willard Straight.
[Inclosure.]

The American Group to Morgan, Grenfell & Co.

Reorganization; Treasury bills. Refer to your second cable March 19th and our reply. President feels it unfair demand immediate repayment Treasury bills and suggests that American group agree to extension of six months in compliance with request of Minister of Finance. We are not therefore in a position to join in urging immediate repayment and must consent to extension as requested.