893.51/2148: Telegram

The Minister in China (Reinsch) to the Acting Secretary of State

My March 7, 1 p.m. The British, French, Italian representatives and myself expressed opinion concerning nondrawing of War Participation loan funds as indicated. We believe it desirable to urge disbandment of War Participation troops which are now under National Defense Bureau, and Northwest Frontier Defense Bureau, both organized to take charge of and continue relations of War Participation Bureau to which such strong objection has been made by Southern delegates, Shanghai, who consider continuance of these forces an absolute obstacle to peace since military control by Tuan and associates is hostile to aims of the Conference. British Ambassador to Japan has been instructed to urge upon Japanese Government desirability of advising dismemberment [disbandment] of these troops. The Japanese Minister at a meeting March 11th stated that his Government considered advice regarding War Participation Bureau as undue interference with Chinese internal affairs. In reply to questions he stated that the loan to the Bureau was a purely commercial transaction on the part of Japanese banks. When asked how Japanese military advisers came to be connected with this loan he stated that he would have to look it up. Other Ministers believe that as the War Participation Bureau was made the vehicle of negotiations with one of the Allies concerning war activities all Allies are to a certain extent responsible before the Chinese people and the world for action taken by the Bureau while still supposedly enjoying Allied countenance. The withdrawal of such countenance is what is proposed. Statements with regard to it can therefore not be considered [Page 322] internal interference. We are now awaiting answer of the Japanese Minister to question proposed March 11th.