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

No. 291

Sir: I have the honor to refer to the Legation’s despatch No. 68, of July 20th [21st], 1920,92 regarding the Consortium in which memtion is made of an instruction received by the British Chargé d’Affaires that in conjunction with his interested colleagues a note be presented to the Chinese Foreign Office giving a full historical statement concerning the formation and aims of the Consortium but avoiding any mention of financial questions. After lengthy discussion the text of a statement was agreed upon by the four Legations and the text telegraphed to the Department in the Legation’s No. 216, August 6th, 6 P.M.,93 which was subsequently amended in consultation with my colleagues to conform with the Department’s instructions No. 208, August 11th, 5 [3] P.M.,94 omitting all reference to Japan’s position. This note was presented to the Chinese Foreign Office on September 28th together with the relevant documents substantially as outlined in the Department’s instruction of July 15th, 8 P.M.95

Referring to heading 5 in the list of documents herewith annexed as submitted to the Chinese Foreign Office and to the Legation’s telegram No. 240, September 6th, 5 P.M.,92 Information Series No. 193 could not be located in the Legation, accordingly the text of the memorandum presented to the Japanese Foreign Office was included rather than the “Department’s note of July 3rd to British, French and Japanese Embassies,” defining governmental support to be given to the Consortium.96 No complete text of this note of July 3rd was in the possession of any of the four Legations.

At the instigation of the British Chargé d’Affaires, under instructions from his Government, this Legation agreed that referring to headings 6 and 7 (see enclosed list of documents) the British texts of correspondence with the Japanese be used, which are almost identical [Page 571] in sense with the State Department’s texts but dated later in each case. The instructions of the Japanese Government also indicated that the British text was contemplated by them for transmission. Under heading 7 (see enclosed list of documents) item B from “State Department March 16”, and item H from “French Government May 25th”, together with heading 8 (Kajiwara–Lamont letters) were included at the request of the Japanese Minister under instructions from his Government. The note of the four Legations to the Chinese Government, with the enclosures, was delivered simultaneously with a second note (copy enclosed)97 stating that the text and documents delivered were confidential and not to be published without the consent of the Legations concerned first having been obtained. I have the honor to enclose herewith copies of the note as delivered to the Chinese Government.

I have [etc.]

(For the Minister)
A. B. Ruddock
[Enclosure 1]

List of Documents Communicated to the Chinese Government Respecting Organization of a New Consortium

State Dept. letter to American Group Banks of July 9, 1918.98
State Dept. Note and Memo, to Embassies of Oct. 8, 1918.99
State Dept. Note to Embassies of May 31, 1919.1
Odagiri-Lamont exchange of letters.
  • Odagiri to Lamont, June 18, 1919.2
  • Lamont to Odagiri, June 23, 1919.3
Memo, from State Dept. to Japanese Foreign Office, July, 1919.4
Exchange of Memoranda between the British Foreign Office and Japanese Embassy.
  • Foreign Office to Embassy, August 11, 1919.5
  • Foreign Office to Embassy, Nov. 20, 1919.6
Exchange of Memoranda between Japanese Government and Governments of Great Britain, France and the United States, March-May, 1920:
Japanese Govt. to Great Britain, March 16.7
From State Dept., March 16,8
From British Government, March 19.9
From Japanese Government, April 14.10
From British Government, April 28.11
From Japanese Government, May 10.12
From British Government, May 17.13
From French Government, May 25.14
Kajiwara–Lamont exchange of letters of May 11, 1920.15
[Enclosure 2]

The American, British, French, and Japanese Representatives in China to the Chinese Minister of Foreign Affairs (W. W. Yen)

Excellency: The Governments of France, Japan, the United States of America and Great Britain considering that the time has now arrived to make a joint communication to the Chinese Government on the proposed scope and objects of the so-called New Consortium which has been under discussion between the four Governments for some time past, the undersigned representatives of France, Japan, the United States of America and Great Britain have the honour to state as follows:

In the course of 1918 the United States Government informed the other three Governments in question of the formation in the United States of America of an American group of Bankers for the purpose of rendering financial assistance to China. The principles underlying the formation of the American group were that all preferences and options for loans to China held by any members of this group should be shared by the American group as a whole and that future loans to China having a Governmental guarantee should be conducted in common as group business, whether these loans were for administrative or for industrial purposes.

In notifying the other three Governments of these proposals the United States Government recognised that the war had created such a mutuality of interests between certain Governments and peoples as to render this co-operation essential to any constructive programme of financial assistance to China. It was suggested therefore that the other Governments which were largely interested in China and in a position at the time to render such assistance—viz. [Page 573] France, Japan, and Great Britain—might be willing to join with the United States in its proposed plan and consent to the formation of similar national Groups organised on the same basis to act in cooperation with the American Group. In the proposal of the United States Government which in practice envisaged a reconstruction of the old Consortium it was specifically stated that there was no intention of interfering with any of the rights of that Consortium. The hope was expressed however that the new national Groups formed might be made so broad as to include the members of the former Consortium as well as others who had legitimate claims to such inclusion, so as to meet the larger needs and opportunities of China in a spirit of harmony and of helpfulness rather than of harmful competition and self-interest.

The proposal of the United States Government as here outlined received the most careful and friendly consideration on the part of the French, Japanese and British Governments which resulted in a meeting be[ing] held in Paris on May 11th and 12th, 1919, at which the chief Representatives of the four Groups were present to discuss the financial details of the proposed arrangement as well as the scope and limit of their activities.

A draft arrangement between the four Groups was then drawn up embodying inter alia the principles of the American proposals. While it is not the intention of the present Note to do more than outline the broad aspects of the question or to enter into financial details which await confirmation by the Groups at the forthcoming inter-group meeting to be held in New York in October next, we consider it advisable to make the position clear in regard to an essential point which might otherwise give rise to misapprehension, namely the amount of support to be given by the respective Governments to their national groups or to the Consortium as a whole.

It is to be understood that the Governments of each of the four participating Groups undertake to give their complete support to their respective national Group members of the Consortium in operations undertaken pursuant to the inter-group arrangement entered into by the bankers at Paris, which arrangement in turn relates to existing and future loan agreements involving the issue for subscription by the public of loans having a Chinese Government guarantee subject to the proviso that existing agreements for industrial undertakings upon which substantial progress has been made may be omitted from the scope of the arrangement.

A collection of documents which have passed between the Governments interested in the Consortium as well as certain letters exchanged between the American and Japanese Group representatives which are herewith enclosed will enable the Chinese Government to [Page 574] follow the course of the negotiations and understand the whole position.

In making this communication to Your Excellency the undersigned venture to reiterate the earnest hope of their respective Governments for the early consummation of a united Government in China so that the New Consortium may eventually be enabled to give practical expression to the desires of the four Governments concerned to assist in the future development of this country.

  • Y. Obata
  • A. Boppe
  • C. R. Crane
  • B. H. Clive
[Enclosure 3—Translation15]

Memorandum of the French Ministry of Foreign Affairs to the Japanese Embassy at Paris

The Imperial Embassy of Japan at Paris has kindly communicated on the 10th instant to the Ministry of Foreign Affairs a note despatched to the Department of State at Washington by the Embassy of Japan, from which it appears that the Government in Tokyo, taking cognizance of the assurances contained in the note of the Department of State under date of March 16 last,16 and deeming useless under the circumstances the insertion of the special clauses providing for the Taonanfu-Jehol line and its branching off toward the sea, declares itself ready to give its support to the conclusion by the interested financial groups of the arrangement reconstituting the financial Consortium in China. The Ministry of Foreign Affairs has the honor to inform the Embassy of Japan that it gladly joins in the general assurances furnished by the American Government. It is happy that it can congratulate itself, together with the Embassy, upon the conclusion of an agreement which assures the friendly cooperation of the interested Powers for the greatest good of China.

  1. Not printed.
  2. Ante, p. 562.
  3. Ante, p. 565.
  4. Ante, p. 552.
  5. Not printed.
  6. For note of July 3, 1919, see Foreign Relations, 1919, vol. i, p. 463.
  7. Not printed.
  8. Foreign Relations, 1918, p. 174.
  9. Ibid., p. 193.
  10. Ibid., 1919, vol. i, p. 437.
  11. See telegram no. 2324, June 18, 1919, from the Ambassador in Great Britain, ibid., p. 451.
  12. See ibid., footnote 27, p. 458.
  13. See note of July 3 to the Japanese Chargé, ibid., p. 463.
  14. See telegram no. 2799, Aug. 14, from the Ambassador in Great Britain, ibid., p. 476.
  15. See telegram no. 3447, Nov. 25, 1919, from the Ambassador in Great Britain, ibid., p. 502.
  16. See telegram no. 484, Mar. 20, 1920, from the Chargé in Great Britain, p. 515.
  17. Ante, p. 512.
  18. See telegram no. 485, Mar. 20, from the Chargé in Great Britain, p. 517.
  19. See telegram no. 614, Apr. 15, from the Ambassador in Great Britain, p. 528.
  20. See telegram no. 688, Apr. 28, from the Ambassador in Great Britain, p. 535.
  21. See footnote 30, p. 542.
  22. Ante, p. 543.
  23. Post, p. 574. No record has been found in the files of any earlier receipt of this memorandum.
  24. Ante, pp. 555, 556.
  25. Supplied by the editor.
  26. Ante, p. 512.