893.51/2533: Telegram
The Secretary of State to the Chargé in China (Tenney)41
This Government has learned with disappointment from the Chicago Bank that on the eve of flotation of the proposed $30,000,000 loan the Chinese Government brought into question the assignment of salt surplus as security for that loan under Article 3 of the contract signed October 20th. The uncertainty and prospect of delay thus interposed have proved acutely embarrassing to this Government which in appreciation of the apparently urgent necessities of the Chinese Government had considered that the emergency warranted it in waiving its previous insistence upon the principle that the financing of China should be undertaken only by an international consortium. Any delay introduced by the Chinese Government itself tends to invalidate the reasons justifying such a departure from the policy thus far followed by this Government in concert with Great Britain, France and Japan in regard to financial assistance to China.
In these circumstances this Government has felt it proper to request the Chicago 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 $5,000,000 [sic] which was the subject of the Department’s telegram of October 11, noon,42 and to assent to a suggestion of the British Government that an effort be made to bring about an immediate advance of approximately £5,000,000 to the Chinese Government by the banking groups of the United States, Great Britain, France and Japan without prejudice to the discussions now in progress in regard to the formation of the new consortium.
[Page 538]The following is the substance of a note from the British Embassy here dated November 8th:43
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The following is the text of the Department’s reply of today:44
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You will take early occasion to advise the Chinese Government orally of the purport of this instruction, with an expression of this Government’s regret that the question raised by the Chinese Government has created a situation in which this Government has found itself constrained to reconsider its approval of the Chicago loan contract of October 20th.
Repeat this telegram without delay to the Embassy at Tokyo which is being instructed to repeat for your information a telegram dated November 11, 5 p.m., on this subject.