File No. 893.51/1930
The British Ambassador ( Reading) to the Acting Secretary of State
The British Ambassador presents his compliments to the Acting Secretary of State, and has the honour to refer to Mr. Lansing’s note No. 150 of July 10, with regard to the formation of an international group to undertake loans to China.
His Majesty’s Government were informed by telegraph of the correspondence which had passed between the Department of State and the American bankers, and have now enquired whether it is the intention of the United States Government that the financial activities of the new four-power group, which it is proposed to establish in the place of the original six-power group, should be limited to undertaking administrative loans to the Chinese Government, or whether it will also be permissible for the consortium to undertake loans for industrial and railway enterprises. The decision under which the making of industrial loans was removed from the scope of operations of the existing consortium was arrived at in September 1913, after the American group had withdrawn from the consortium. His Majesty’s Government found themselves obliged to agree to a modification in this sense of the agreement of 1912, in view of the wish of the Japanese Government to resume their freedom of action in regard to industrial loans, and also owing to the pressure exercised by independent banking and other interests, which rendered it impossible for the British authorities to continue to [Page 180] regard the British group in the consortium as the only organization entitled to receive official support in connection with the financing of industrial enterprises in the Chinese Empire. In these circumstances, supposing it to be the intention of the United States Government to renew the original six-power contract in the form of a four-power contract, it would be difficult for the British Government and for the other Governments concerned to agree to the revival of the agreement of 1912, in so far as it purports to prohibit the independent conclusion of loans for industrial purposes.
In order that the British Government may be in a position to appreciate fully the scope of the American proposals, the British Ambassador would be much obliged if he could be informed of the view of the United States Government on the point raised above.