File No. 893.51/1726

[Untitled]

Japanese Minister has handed to Minister for Foreign Affairs note verbale urging that as the Bankers’ Syndicate is considering making a loan the Chinese Government should not make any loans elsewhere and stating that the Japanese Group is ready to supply funds immediately for urgent needs.

Minister of Finance informs me that Odagiri, Japanese representative, stated to him that as the Bankers’ Syndicate found it difficult to act at present the Japanese Bank was ready to loan immediately 10,000,000 yen on condition, however, that the negotiations with Americans be broken off. When questioned as to the attitude of the other members of syndicate Japanese representative stated Allies satisfied and Germany need not be considered. Minister of Finance dissented and stated that proposed action would be justifiable only if syndicate dissolved.

When Minister of Finance remarked that the sum mentioned would not be sufficient Japanese representative assured him that in a short time larger loan could be provided by syndicate. Minister of Finance believes that after having wrecked American negotiations and secured control Japanese would then offer participation to New York Group. He also fears that should he decline the Japanese offer influence will be exerted to oust him.

I regret to report such manifestations of an attempt covertly to abridge American opportunities and to make our action dependent on Japan. Present difficulty is the fact that all reports concerning alleged protests of the Allied Powers against the American railway and Chicago loan were sent out by Japanese agencies; unfortunately some persons in the United States appear to be walking into trap. Continued prompt independent action on our part is necessary to assure our position which is inherently very strong.

Reinsch