File No. 893.51/1734
Minister Reinsch to the Secretary of State
Peking, December 18, 1916.
Sir: I have the honor to report that, in compliance with the Department’s telegraphic instructions of December 5, relating to the American loan to China, I have called upon the Ministers of Russia and Japan, and the Chargés d’Affaires of Great Britain and France.
In each case I stated that the American Government had observed the political and financial situation in China and that it was not desirous of having the Chinese Government reduced to a situation where all kinds of desperate financial expedients would appear necessary to those in charge of China’s affairs. Such a situation could benefit no one.
I further stated that in order to protect the right of American bankers to a fair participation in Chinese financial enterprise, the American Government would take a very decided stand against any strained construction of existing agreements made by the Chinese Government in matters of finance; particularly by expanding the scope of such agreements beyond the strict import of the language therein used. More particularly, I added that the American Government considered that the terms of the loan just negotiated with the Continental & Commercial Bank of Chicago did not conflict in any way with existing agreements.
On the basis of previous instructions and intimations which I have received from the Department, I felt justified in stating further that I did not believe that the American Government would countenance [Page 149] any loans not made upon sound principles with respect to the security thereof and the use of the funds provided; and that it did not favor loans carrying concessions or secret privileges.
In every instance, the respective representative with whom I was talking proceeded to ask me what would be the attitude of the American Government towards a reentry of the American Group into cooperation with the Consortium. I reviewed the history of the attitude of the present administration on this question, and stated that the American Government could not do anything which would imply sanction to a monopolistic or exclusive domination of Chinese finance in general. If the cooperation of the American Group could be arranged, considering all the circumstances of the war and the limitation above set forth, I believed that the American Government would not withhold its approval. In every case the representative with whom I was talking at the time expressed himself as greatly desirous that Americans should participate in the business of the Consortium. The Japanese Minister stated to me that, in his view, it would be better that the arrangements for the loan should be completed, in order to avoid delay and troublesome questions, and that then the American Group should be invited to participate. The French Chargé d’Affaires, on the other hand, stated that it was the preference of his Government and that of Great Britain that the American financiers should be consulted from the beginning of the negotiations; but that he was not informed as to the views of Russia and Japan.
As the German Minister is at present sick, I have not had an opportunity of bringing to his attention the views of the American Government. He has, however, on other occasions, expressed to me his feeling that it is proper and desirable for American bankers and capitalists to take a part in Chinese affairs, and he has also expressed the readiness of German interests to cooperate with Americans in specific enterprises or undertakings.
In conclusion, I have the honor to report that during these conversations with the representatives of the Powers mentioned, none of them stated any objection to the loan of G$5,000,000 made by the Chicago bank, nor to the policy of the American Government with respect to the free participation of the American bankers in Chinese finance, as explained to them. On the contrary, they appear to consider such participation of Americans as quite natural and unobjectionable, provided existing agreements are not interfered with; the British and French Chargés d’Affaires were particularly friendly in their expressions concerning American enterprises in China.
I have [etc.]