893.51/3027: Telegram
The Acting Secretary of
State to the Minister in China (Crane)
Washington, November
2, 1920—5 p.m.
309. Your 340, October 22nd, 8 p.m.20 communicated to the American Group which replies
as follows:
- “(1) We recognize that the councils [counsels?] of the Japanese are at times
divided, but in the matter of the Consortium the
Japanese Banking Group seems to be acting in perfect
good faith and with no lack of authority. The Japanese
made no suggestion as to the Land Tax and the Minister
must have been entirely misinformed on that whole point
because there has been no request that the Land Tax be
included as security.
- (2) It must be made clear that the Consortium is not
prepared to rehabilitate the Chinese Government if such
rehabilitation requires the advancement of considerable
sums for early administrative purposes. The success of
the bankers in floating Chinese loans is dependent
entirely upon the favorable attitude of Western
investors. These investors are well aware today that the
Chinese Government is incurring a deficit of from six to
eight million dollars per month and American investors
will not subscribe to a loan made for the purpose of
meeting such a deficit. The only chance to induce
investors to buy Chinese loans is if they are intended
for really constructive purposes. As already stated, the
American Group is now working on a loan plan with such
ends in view.
- (3) American Group has requested that State Department
arrange with the other three Governments to issue a
joint announcement of the final formation of the
Consortium, which announcement will presumably be made
in the near future.
- (4) The Governments are not in a position to state
that the Consortium’s operations will be withdrawn at
any given time. The present Consortium agreement covers
a period of five years. Further, it should be manifest
that without the cooperation and active desire of the
Chinese people and Government the Consortium cannot
operate at any time.”
