File No. 893.51/1643
Minister Reinsch to the Secretary of State
Peking, April 28, 1916.
Sir: I have the honor to enclose a translation of a note dated the 4th instant from the Minister for Foreign Affairs, dealing with the authorization of Dr. V. K. Wellington Koo, the Chinese Minister at Washington, to negotiate a loan with Messrs. Lee, Higginson & Company. There is likewise enclosed a copy of a note dated April 5, from H. E. Liang Shih-yi, stating the purpose for which the Chinese Government intended to use the proceeds of that loan.
While the movement of disintegration was in progress, and as long as it seemed that a strong organization of the opposition might be effected, I felt constrained in my telegrams to you to advise against the completion of the loan for the present. However, the utter disorganization which exists among the revolutionists in Kwangtung and Kwangsi, the fact that the army of the Central Government has been kept entirely intact, but especially the fulfillment on the part of the Government of all the demands of the revolutionists dealing with institutional changes, have created a situation under which I am constrained to admit that no valid ground exists for refusing to complete this contract, notwithstanding the outcry which would probably be raised against it by the revolutionary element. To these considerations must be added the fact the organization of men in charge of the Central Government and of the loyal Provinces, representing as it does the constituted authority of the State, is also the only one from which, under all the circumstances, the aversion of total anarchy and disorganization can be expected.
It is not, of course, assured that the men constituting the Government may be able to avert disaster, but disaster would the more surely come if legitimate sources of revenue for carrying on the ordinary functions of Government, including the maintenance of law and order, were to be withheld.
I have [etc.]