893.51/2233: Telegram

The Ambassador in France (Wallace) to the Acting Secretary of State

413. From Marshall:

Your 8338, May 19, 2 p.m.93 Meeting for organization of new international consortium highly successful. Lamont reports matters on the whole moved smoothly and satisfactorily. Tentative agreement was adopted which commits all the interested groups to the principles laid down by the Department in initiating the present plan. British and French were cooperative from the beginning. Japanese representative claimed he had no specific authority to discuss certain of the important principles involved but ultimately agreed to the resolutions as drawn and to the proposed draft of agreement which he signed together with the representatives of the other groups. The following resolutions passed unanimously, subject to confirmation of the respective Governments:

It was resolved that the principles laid down for the formation of the new consortium for Chinese loan business in the note dated [July 10,] 1918, by the American Government, addressed to the British, French and Japanese Governments, and the subsequent memorandum relating thereto,94 be and the same are hereby approved.
It was resolved:
That in addition to future business all existing loan agreements and options which involve the issue for subscription by the public of loans, be pooled with the exception of agreements and options relating to industrial undertakings (including railways) upon which substantial progress has been made.
That the groups will surrender to the consortium any such agreements and options which they themselves possess or control.
That the groups will use their best endeavors to induce other parties who may possess or control any such agreements or options to surrender the same to the consortium.
It was declared that the groups would be prepared to consider the inclusion of a Russian group in the new consortium as soon as a government recognized as such by the respective Governments of the groups, should be established in Russia. The Chairman was requested to communicate copy of this resolution to the Russian group.
Mr. Simon94 having reported that a Belgian group had requested that they be included in the new consortium as a principal, it was resolved that favorable consideration should be given to this request after the formation of the new consortium. Mr. Simon was requested to communicate copy of this resolution to the Belgian group.
It was resolved that each group in the new consortium shall be a national unit and that no member of any group shall, within the scope of the operation of the consortium, represent directly or indirectly any other national interest. That each group shall be established by a formal agreement in writing. That each of these agreements shall be furnisned to the other groups.
It was recognized in principle that industrial undertakings and railways in particular should be handled as an undivided whole and not sectionally and it was resolved that instructions be given by the groups to their respective representatives and engineers to prepare a joint scheme for carrying this principle into effect.
The question of the participation of the Japanese group in the Hukuang Railway loan having been raised, the other groups stated that it was their intention, so soon as the new consortium was formed and the Japanese group included therein, to offer to them an equal share with the other groups in this loan upon the terms of the last mentioned resolution.
A draft of the agreement, a print of which is annexed hereto, was read and approved and it was resolved that the same should be remitted for the further consideration of the groups in consultation with their respective Governments.

Davison95 is taking proposed draft to America and Morgan is to send Department a copy. I am also sending one by pouch. Do you desire full text cabled? I have not sent this information before as Lamont advised me same had been cabled Morgan for immediate transmission to Department.

  1. Text printed from corrected copy received about May 31.
  2. Not printed.
  3. See Foreign Relations, 1918, pp. 172176, 195.
  4. S. Simon, representative of the French group.
  5. Probably Henry P. Davison, member of the firm of J. P. Morgan & Co.