File No. 893.51/1432.

The American Group to the Secretary of State.

Sir: Referring to our letter of March 31, 1913, regarding the two loans made by the American group to Chinghua College, we beg to enclose herewith a copy of a communication, dated May 13, 1913, [Page 200] addressed by Mr. D. A. Menocal, Manager of the International Banking Corporation in Peking, to the home office.

We should appreciate any information which the Department may give us as to the steps which have been taken in this matter.

Very truly yours,

Willard Straight.

The Acting Manager of the International Banking Corporation to the General Manager.

Dear Sir: In view of the fact that the outstanding arrears of the Chinese indemnity due to the American Government will be repaid from the proceeds of the reorganization loan as soon as arrangements are completed for this flotation, it is our intention to request the American Legation here to remind the proper authorities at Washington of the lien held by the American group upon that portion of the indemnity, and its arrears, to be returned to China by the United States Government. This hypothecation is covered by loan agreements between the American group and the Ch’ing Hua College dated the 26th November 1912 and the 14th January 1913. We consider it advisable to take this precaution for fear that the portion to be returned might be paid over to the Chinese Government either in Europe or America, when the parties receiving these funds may inadvertently apply them to other purposes before satisfying the rights held by the American group.

But as it is quite possible that the State Department may take no action upon such a telegraphic request from the American Legation here, we will wire you direct as soon as we send in our letter to the American Chargé d’Affaires, with the idea that you may take such action with the American Treasury Department as you deem necessary. At the same time we will, of course, communicate in the above sense with both the Ch’ing Hua College and the Minister of Foreign Affairs and Finance.

Yours very truly,

D. A. Menocal.