File No. 893.51/1804
The Secretary of State to Ambassador Page
Washington, September 8, 1917, 4 p.m.
5399. The Department is today sending to the British Embassy here the following communication:
On the twenty-first of August last His Britannic Majesty’s Chargé d’Affaires handed to the Secretary of State a memorandum relating to the requests of the Chinese Government for certain loans for currency reform and administrative purposes aggregating a very large sum.
His Britannic Majesty’s Government was stated to view these requirements with considerable alarm inasmuch as the terms of issue and of interest would necessarily be so unfavorable to China as to make such heavy financial obligations at this time seem very inadvisable. The Secretary of State was informed that His Britannic Majesty’s Chargé d’Affaires at Peking would, therefore, be instructed to point out to the Chinese Government that the Chinese financial situation [Page 139] ought shortly to be far more favorable than for a long time past because of prospective suspension of indemnity payments, increase in customs duties and other additions to China’s revenues.
The American Government was requested to send similar instructions to the American Minister at Peking. His Britannic Majesty’s Government observes further that if the Chinese Government should persist in their requirements the only member of the Allied Governments which was in a position at present to furnish the money was Japan which would consequently acquire a predominant position in Chinese financial matters.
The Department of State replied to the memorandum of His Britannic Majesty’s Embassy on August 24 stating that no official intimation had been received by the United States Government of the request for the loans to which the memorandum referred, but that the Department of State shared the opinion of His Britannic Majesty’s Government that that time was inopportune for the assumption by China of such heavy financial liabilities as were contemplated and that the American Minister had been instructed in this sense and authorized so to state to the Chinese Government if they should consult him in regard to the matter.
The Department of State is, therefore, very much surprised to receive from the American Legation in Peking this morning a cable message stating that the Chinese Minister of Finance on Monday next will begin negotiations with the representatives of the international Consortium for a loan of approximately 200,000,000 Mexican dollars for the purpose of currency reform exclusively, the loan to be secured by the surplus revenues from the salt gabelle and the maritime customs and the Government’s profits from seigniorage and from the smelting of copper cash. The Department of State would be glad to be informed whether His Britannic Majesty’s Government has found reason to modify its attitude towards the proposed loan and whether the participation of the British banks will have the support of their Government.
Please confer with the Foreign Office and ascertain its views.