The Acting Secretary of State to the Minister in China ( Reinsch )82
Your February 1, 5 p.m.
Following received from the Embassy at London:
“I understand that the attitude of the British Government towards the completion of the International Consortium now under discussion, has not in the past been favorable. It had been thought here that, owing to the inclusion of industrial loans in the proposed agreement, the American group would consist of industrial as well as financial institutions and that this would result in a monopoly of all business both financial and industrial. Foreign Office did not favor joining a consortium which might involve support of a monopoly which they could not justify.
Morgan, who I understand, will take up this matter in Paris also next week, has explained here that there was no thought of such monopoly but that the plan now under consideration has to do with financial affairs only. This explanation seems to have given satisfaction and it is hoped the matter will now receive favorable consideration in Great Britain. Confidential. Hukuang loan belonging to the original four powers, United States, Great Britain, France and Germany. Feeling here is that the transference of German interests to Japan should only be offered to Japanese as part of the whole transaction and should be made as a concession and part of the advantage Japan would receive from coming into the consortium.”
Referring to the Hukuang Railway loan the Department is of the opinion that it is not a question of transferring Germany’s interest [Page 570] in it but simply of permitting Japan to participate along with the United States, England and France in making a loan for the completion of the Canton-Hankow section of the railway after Germany’s interest in the other section has been eliminated. Department also feels that Japan’s agreement to the consortium proposal should not be made a condition precedent to her participation in the loan. The Department is already on record as approving Japanese participation as above suggested provided loan is made under the conditions outlined in the consortium proposal.
Repeat to Embassy, Tokyo for information including your February 1, 5 p.m.
- See last paragraph for instruction to repeat to Tokyo.↩