893.51/2534
The Department of State to the British Embassy
Memorandum
The Department of State has received the memorandum of the British Embassy under date of October 29th, and has been happy [Page 501] to note that the British Government agrees that the Consortium should be proceeded with and every effort should be made to induce Japan to enter into it without any reservations, and is prepared to cooperate in this. For the reasons stated in the telegram of October 11th to the American Embassy at London, of which a copy has been handed to the British Embassy, this Government is unable to concur in the suggestion of the British Foreign Office that the other interested powers should, even in the last resort, concede the reservation claimed by Japan in respect to South Manchuria.
The Department further notes that the British Government renews its proposal that a small loan of, say, £5,000,000, should be made by the four Powers immediately. The memorandum of the British Embassy furthermore makes clear what the Department had not previously understood, that the proposal contemplates that this advance should be made without prejudice to the discussions now proceeding for the formation of the Consortium. On this understanding, and in deference to the conviction of the British Government that there may thus be found a means of enabling the Chinese Government to meet its present financial crisis, without risking the inauguration of a new period of independent and uncontrolled loans, this Government is willing to make a further effort towards cooperation in the manner indicated by the British proposal. To this end the Department has requested the Chicago Continental and Commercial Trust Bank to withhold at least temporarily its confirmation of the contract of October 20th for a loan of $30,000,000, and to proceed only to the issue of the smaller loan (for $5,500,000) for the redemption of bonds shortly maturing under its loan contract of 1916, as previously notified to the British Government.80