File No. 893.811/201.


Your telegram December 17. Red Cross has taken up conservancy scheme with American bankers. American International Corporation alone have shown disposition to interest themselves therein. They feel, however, that in view of present political situation in Far East, it might be prejudicial to best interests China should Americans now actively negotiate with Chinese Government for a large loan. Even if loan were concluded, it would moreover probably be impossible to issue here at this time on terms satisfactory to China. Bankers appreciate that option expires at end of January but consider in view of world wide situation, if China is really desirous of interesting American capital this enterprise, should be possible for Government extend option at least another year. In the meantime, bankers suggest that it would be desirable for Legation to place representative Siems-Carey in touch with proper officials in order that they may discuss general plans which might become operative upon improvement general situation.