File No. 893.51/1715

Minister Reinsch to the Secretary of State


The Chinese Government apprehend that if insisted on the claim of the British, French, Russian and Japanese group banks to the effect that they represent the five-power syndicate together with their broad interpretation of Article 17 of the loan agreement so as to include administrative loans of whatever kind, threatens to destroy equal opportunity and reduce China to fiscal dependence on certain powers under the leadership of Japan. It considers very important the right of independent banks to do business not specifically preempted, and will appreciate the assistance of the American Government in safeguarding this.

A rumor has been circulated, emanating from Japanese sources, to the effect that alleged strongly German character of the Continental Commercial Bank accounts for making of the loan which is represented as directed against the interests of allied powers. While this clumsy invention will not make much impression it indicates a possible line of attack on independent American enterprise in China.