File No. 893.51/1865
The Ambassador in Great Britain ( Page) to the Secretary of State
8258. My telegram 8116, January 1, 2 p.m. Following note dated January 12 received from Foreign Office:
With reference to my note of the 31st ultimo, relative to the projected issue of a second or supplementary reorganization loan to China for twenty million pounds for currency reform purposes, and to the proposed advance of two million pounds out of that loan for which the Chinese Government have recently applied, I have the honour to state that I learn from a telegram received from His Majesty’s Minister at Peking that the representative of the Japanese group in the international consortium signed an agreement on the 6th instant with the Chinese Ministry of Finance for a second advance of one million pounds and not two million pounds which was the amount originally asked for by the Chinese Government.
I may remind your excellency that original advance of ten million yen was made some months ago to the Chinese Government by the Japanese group independently and that this accounts for the description of the transaction now under discussion as the second advance on the supplementary reorganization loan.
It appears to me that the step which the Japanese group has now taken need not necessarily prevent the realization of the scheme which I outlined in my above-mentioned note, supposing that the proposal commends itself to the Government of the United States, as it would still appear feasible for the British group to participate nominally in the advance provided that the American group are willing to find the other one million pounds to enable it to do so under an arrangement whereby the British group will guarantee the repayment of their share, namely, five hundred thousand pounds, if not already repaid by the Chinese Government within year after the war.
The consent of the Japanese group and of the Japanese Government will doubtless have to be obtained to this fresh proposal but in view of the fact that American participation in the loan was suggested originally by the Japanese, and would still appear to be desired by them, it seems not improbable that if the United States Government were to intimate to the Japanese Government that the eventual participation of an American group in the projected loan must be made conditional on its participation in the advance, having regard to the fact that that advance is secured on the same revenues as the loan itself, no objection would be raised by the Japanese if it were suggested that the remaining one million pounds should be provided in the manner described above. I accordingly have to request your excellency to be so good as to submit this suggestion to the United States Government.