File No. 893.811/216


My telegram of April 21, 6 p.m. Grand Canal loan negotiated with great caution by Gregory, Carey, who obtained terms I consider almost too severe for China.

The Chinese Government observed treaty with Germany by giving notice.

No treaty obligation has accrued in favor of Japan; at any rate obligation purely one of Chinese Government in connection with which no liability could attach to bankers whose obligations so profitable and universally beneficial enterprise.

It is difficult [sic] to see the Government is also ready to conclude agreement for Kiangsu portion which could be undertaken first if desirable. It is of capital importance that a contract in connection with Huai conservancy be concluded, otherwise another glaring instance added to past deplorable failures of American finance in China.