893.51/2408: Telegram
The Minister in China (Reinsch) to the Secretary of State
[Received September 8, 4.20 a.m.]
Your cipher telegram of August 27, 4 p.m.
In committing itself as suggested the Chinese Government would arouse bitter hostility of Japanese and pro-Japanese faction. Desperate financial condition of the Government is known to you. They would fear worst consequences unless I could assure them that they may actually count on financial support either by way of a response to their demarche made in June by telegram of June 11, p.m.,55 or by completing the Chicago bank loan.56 Latter option expressly held open awaiting Chinese consent to certain conditions which the Chinese Government is now ready to meet.
Second difficulty: Attempt to obtain immediate acceptance in principle of consortium terms will find Chinese, still suffering from many disappointments, reluctant to adopt sweeping terms apart from actual loan negotiations. If it were possible to give immediate assistance in one of the above alternatives, negotiations for more [Page 485] extensive arrangements would bring the results desired as a consequence of the influence established by such action.
I shall do everything that is safe to secure action desired. If it should be necessary to define industrial loans could they be limited to communications and conservancy matters?