893.51/2559: Telegram
The Secretary of State to the Ambassador in Japan (Morris)46
The Legation at Peking has advised the Department that the Pacific Development Corporation has entered into a contract with the Chinese Government by which that Corporation is to arrange an immediate loan of $5,000,000 with an option for an additional loan or loans of $20,000,000 by subrogation to the rights of the Chicago Bank under the terms of the loan contract of October 20th (as communicated to you by the Department’s telegram of October 22, 5 p.m.47)
The negotiations for this contract have been carried on by this American Corporation without the knowledge or approval of the Government of the United States. In view of the acceptance by the Government of the United States of the British proposal for a further effort to arrange an immediate advance by cooperation among the groups of the four interested Powers pending the formation of [Page 542] an international consortium (as explained in the Department’s telegram of November 11, 6 p.m.47) this Government feels obligated under present circumstances to withhold diplomatic support of this transaction.
It is desired that you take occasion to explain informally to the Japanese Foreign Office the situation created by the independent action of this American Corporation and state that this Government will not lend its support thereto unless it should prove impossible to avert the impending financial crisis in China by the joint action which the British Government has suggested and which this Government heartily supports. In communicating this to the appropriate officials of the Japanese Foreign Office you will of course make it clear that the contract entered into by the Pacific Development Corporation is a further evidence of the growing interest of American financiers in the situation in China such as this Government would not be in a position to restrain or circumscribe save in the interests of the broad international policy represented by the proposed consortium and that should this Government be forced to the conclusion that it must abandon hope of realization of that purpose it would have no alternative but to withdraw its present restrictions upon the initiative of American financial interests seeTring an outlet in China. Such a condition is not desired by this Government which still earnestly hopes for the attainment of international financial cooperation in the rehabilitation of China: but the Department feels and desires you to impress upon the Foreign Office that the insistence of the Japanese Government upon holding aloof from such cooperation upon the equal terms contemplated by the consortium is tending to force an issue which this Government is for its part most anxious to avoid.
Repeat to Peking without delay for its confidential information and guidance.
- See last sentence for instructions to repeat to Peking. The same telegram, except for the last sentence, sent Nov. 29, 4 p.m., to the Ambassador in Great Britain (No. 6227), with instructions to communicate to the Foreign Office and “Repeat to Paris for similar communication to the French Foreign Office.”↩
- See footnote 24, p. 527.↩
- See footnote 41, p. 537.↩