A copy of the note has also been sent to Mr. Hugh D. Marshall,
Special Assistant to the Department of State at present in
Paris.
[Enclosure—Translation]
The French Minister of Foreign Affairs
(Pichon) to the American
Ambassador (Wallace)
Mr. Ambassador: The Minutes of the
meeting held in Paris on the 11th day of May by the
representatives of the four groups appointed to form the new
consortium for loans to China, together with the text of the
agreement signed on the 12th day of May, subject to the approval
of the respective Governments, has just been communicated to the
Ministry for Foreign Affairs.
I had already had occasion to make known several times to the
Federal Government, that France appreciated the generous
initiative of the United States and assented in advance to the
general lines of the plan elaborated by Mr, Lansing. The groups
having taken as a basis for the formation of the new consortium
“the principles outlined in the American note of the 11th [10th] July “6 and the
resolutions adopted being but the application of these
principles, the approval of the French Government may already be
considered as given.
[Page 444]
There is one point, however, upon which I think it useful to
define France’s attitude. It is the one regarding the support to
be given to the consortium by the French diplomatic
representatives in China.
In order to prevent the harmful effects of possibly inconsiderate
competition, Mr. Lansing, in his memorandum of October 8th,
1918,7 provided
that the members of the new consortium, once the agreement made,
should refrain from giving support to independent financial
operations unless previously authorized to do so by the
interested Governments. This may be considered as covered by the
agreement of May 12th.
In subsequent correspondence, there has been a question sometimes
of the Governments themselves “not supporting any other
financial operation without previous agreement”, at other times
of “their reserving to the Consortium their exclusive support”.
It would be well, I think, to come to an agreement at once as to
the import of these expressions and the scope of the
undertakings which might result from their adoption.
Although pursuant to resolutions 1 and 2 entered on the minutes
of the meeting of the 11th day of May, the groups have agreed to
include industrial loans in their operations, the very terms of
these resolutions provide that industrial contracts (including
railways) of which the individual members are the beneficiaries
and in the execution of which “substantial progress has been
made” are excluded from the pool. On the other hand, it is
stated in paragraph (c) of resolution No. 2 that the groups will
make every effort to obtain that “third parties” shall pool the
contracts or options they may possess, from which it appears
that the consortium itself admits the existence and carrying out
of industrial contracts other than those possessed by its
members.
You are moreover aware that in France as well as in England, the
groups whilst admitting new members have, for various reasons,
left out certain establishments having important interests in
China. On the other hand new enterprises may be created at any
moment which whilst desirous of exercising their activity in
China may not be disposed to enter the Consortium or which the
Consortium may not be desirous of admitting. There is nothing in
French legislation permitting the limitation of the individual
activity of private persons or of financial or industrial
corporations, nothing enabling its field of action to be
restricted, either in China or in any other part of the world.
The result is that the Consortium not having grouped and being
moreover practically unable to group all the French elements
which are working or may one day desire to work on the territory
[Page 445]
of the Republic of
China, cannot lay claim there to the exclusive support of the
French Government. Neither the rules of our public law nor
parlimentary opinion would permit us to concede a kind of
monopoly to the Consortium. You are besides aware that at the
time of the constitution of the old Consortium, no privilege in
law or in fact was attributed to it and that its founders
counted only on the financial power of the organization, the
soundness of the participating establishments and the
coordination of their efforts to secure for themselves that
preponderating position on the Chinese market, of which they
have not ceased to benefit. It is on these intrinsic elements of
success rather than on legal privileges that the new Consortium
must base its fortune.
Under these circumstances does not the Federal Government think
that the formula concerning the support to be given to the
Consortium might be worded as follows:
“The Governments of the four participating groups
undertake to give their complete support to the
Consortium in all operations which it will undertake and
which will have for their object the improvement of the
financial situation of China and its industrial
development.
In the event of competition for the obtaining of any
specific contract, the collective support of the
diplomatic representatives in Pekin of the four
Governments will be exclusively assured to the
Consortium.”
I should be grateful if you would kindly let me know the views of
the Federal Government in regard to these suggestions which I am
submitting by the same mail to the British and Japanese
Governments.
Please accept [etc.]
