File No. 893.51/1923a

The Secretary of State to the Ambassador in Great Britain ( Page )1

[Telegram]

Department’s No. 5876, November 22, 5 p.m.2

Representatives of J. P. Morgan & Co., the National City Bank, the First National Bank, Guaranty Trust Co., Kuhn, Loeb & Co. and the Chase National Bank, all of New York, and of the Continental & Commercial Trust & Savings Bank of Chicago met here June 26 at the invitation of the Department to consider the formation of a group to undertake a loan to China. Messrs. Lee, Higginson & Co. participated in later conference in New York. It was agreed that other banks from various sections of the country should be permitted to join the group so as to make it representative. The policy of cooperation with banking groups in other countries was also considered. To-day3 the Department received a letter from the banks mentioned suggesting the formation of a four-power group to consist of financial agencies to be recognized by the Governments of Great Britain, France, Japan and the United States respectively, though it was expected that under existing circumstances the groups of Japan and the United States would carry the participation of Great Britain and France.

A proposed condition of membership in such group is a relinquishment either to China or the group of any options on loans, all loans to be group business. The letter further states the belief of the banks that the people of the United States would not be willing to [Page 177] subscribe to the loan unless the American Government will state at time of issue that the loan is made at its request and that Government has approved terms and conditions and will do all in its power to see contract carried out.

The Department has replied that it approves the formation of a four-power group since all four powers are deeply interested in measures to strengthen China and fit her for more active part in the war and that approval by this Government and other cooperating Governments and by China of terms would not only not be objected to but would be considered an assurance that the welfare of China and the proper interests of other Governments were duly considered and the terms of a character to promote common good. The Department states, however, that the American Government would not approve terms seeking to impair sovereignty of China. The Department also agreed to state at time of issue that the loan is made at its request. It regards relinquishment of options a reasonable condition of membership. It also states its willingness to take all possible steps to insure the execution of equitable contracts made in good faith by its citizens in foreign lands.

Lansing
  1. The same, mutatis mutandis, on the same date, to the Ambassadors in France and Japan and the Chargé in China.
  2. Foreign Relations, 1917, p. 156n .
  3. Letter of July 8, 1918, received on July 9, is to be inferred.