File No. 893.51/1819
Minister Reinsch to the Secretary of State
Peking, October 11, 1917, 1 a.m.
The French and British Group representatives are greatly alarmed at the currency loan prospects. Minister of Finance proposed the loan to the Consortium representatives at a meeting he had invited without indicating his purpose. The Japanese bank as well as the Russian assumed for themselves a completed status in relation to currency loan although their locus standi is not derived directly from the Chinese Government but through agreement with other Consortium banks which alone have option rights with the Chinese Government. The British and French banks have asked for a further extension of the option provided in the currency loan which now expires October 14. French Chargé d’Affaires has informed the Chinese Government that a refusal of this request would be considered unfriendly. Nevertheless it is feared that Minister of Finance will decline the extension and that then his new proposal which was made to the Consortium Powers indiscriminately will have the right of way. Apparently this would put the matter practically in the hands of the Japanese who at present lead Consortium and will enable them to obtain final control over China; should the Consortium however decide not to make the loan Japan could then make it herself. For this reason it seems to the British and French imperative that the option should be extended.
The French banking representative has asked me whether, in view of the fact that currency reform in China has always been considered a leading interest of America, the American Government could not do something to prevent the dangerous consummation indicated. Prime Minister does not favor this loan but cannot at present dispense with [the support?] of Minister of Finance. No satisfactory solution is apparent except for the United States either to join with [Page 149] other Powers in a currency loan made under the leadership to which past action entitles it or without delay to give direction to Chinese policy toward joint war action including necessary financial assistance.
In addition I beg particularly to submit to your consideration the suggestion that the American Government should approach the British and French, and eventually the Chinese Governments, with the view that the result [history?] of currency loan negotiations carried on with the assistance of our Government on the basis of its interest in the treaty obligation of China to provide uniform coinage and embodied in the Agreement of April 15, 1911,20 involved a [recognition of?] general American interests over and above such individual rights as [accrued?] to so called American Group and [could not be?] waived upon its withdrawal from the reorganization loan; that it considers that it retains such an interest in Currency Loan Agreement as would entitle it to be consulted in connection with any loan made for purposes of that agreement; and that it consequently expects that status quo in regard to it will be maintained by a further extension of the option until such time as the Government of the United States, in consultation with the other Governments whose nationals are parties to the agreement, shall have determined the question of its assuming either directly or through some designated financial agency the position considered to have been granted principal [to?] American interests in connection with the project for currency reform.
- Currency Reform and Industrial Development Loan; For. Rel. 1912, p. 95.↩