Papers Relating to the Foreign Relations of the United States, 1919, Volume I

893.51/2398

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

Peking, August 4, 1919.
[Received September 3.]

No. 2925

Sir: In reply to your instructions No. 996 of June 18,⁸ relating to an accomodation advance of $300,000 by the International Banking Corporation to the Chinese Minister of Education, I have the honor to make the following report:

Your telegraphic instruction of November 16, 1918,⁹ related to a proposal to make a joint declaration in common with Great Britain, France, and Japan. As such joint declaration was not made,¹⁰ it was not understood that the American Government had bound itself in this matter. It was, indeed, understood that no loans would be made by Americans which, either on account of their size or their application, would, in any way, encourage the continuance of civil dissension and hostilities in China. It was not believed that the making of occasional small advances in current banking business was to be especially discouraged. The Banks of Peking constantly make such advances in the ordinary course of business.

In connection with the present advance, the special precaution was taken of informing the representatives of the southern authorities. No objection whatsoever has been made to this advance the character of which is thoroughly understood. The fact that when the Chinese Government was unable to furnish money to the Ministry of Education the American Bank should have made an advance at the ordinary rates of interest (while the Chinese Government has frequently had to pay as high as 2% a month) is received with nothing but recognition, as is also the fact that the urgent temporary needs of education in the metropolitan district have thus been met.

For all the above reasons, I do not believe that the making of this advance was contrary to the policy, the international adoption of which the American Government advocated in November 1918.

I have [etc.]

Paul S. Reinsch

8. Ante, p. 511.
9. Foreign Relations, 1918, p. 120.
10. The Minister had evidently overlooked the joint aide-mémoire presented early in December, 1918, to the President of China and the Southern leaders by the Governments of France, Great Britain, Italy, Japan, and the United States. See Foreign Relations, 1918, p. 134.