The Ambassador in France (Wallace) to the Secretary of State
[Received January 14—7:05 a.m.]
120. Your 9387, December 20, 4 p.m.62 I have received a note from the Foreign Office today upon this subject, the following being its pertinent portions:
“The information upon which Your Excellency’s inquiry was evidently based seems to have originated from incorrect reports forwarded to the State Department.
Pursuant to my instructions, Mr. Boppe63 limited himself to recalling to the Government at Peking that the wines and tobacco revenues had been appropriated to the Banque Industrielle de Chine as a first mortgage to guarantee loans contracted October 13, 1913 and January 21st, 1914 and subscribed to by the French public and that in respect thereof the Government of the Republic as well as the Banque Industrielle were justified in claiming the right to participate in the control of the aforesaid revenues by exacting that certain posts in the administration of these revenues be reserved for French officials.
I may add that prior to this and even before the execution of the contract with the Pacific Development Company, as soon as my Department was given cognizance of the terms of the operation under consideration I had instructed Mr. Jusserand to confer in regard thereto with the State Department and to remind it of the rights acquired by the Banque Industrielle. Our Ambassador had been requested to reiterate to Mr. Lansing how desirous we were of [Page 617]active Franco-American cooperation [in] the [Far] East in that respect. We were quite agreeable to an understanding between the American company and the French company unless the United States Government raised objections to transaction being undertaken by an establishment not belonging to the consortium, which attitude we would have preferred in the premises. Therefore there was no idea of presenting a protest such as we formulated to the Government at Peking in 1918 [1919?] when there was a question of a loan likewise constituting a lien upon the wines and tobacco revenues and entailing the reorganization of this administration by a group of another nationality.64 Moreover the director of the Banque Industrielle, who was then passing through the United States conferred last August with Mr. Long at Washington and at New York with the director of the American Tobacco Company with regard to the [possibility of] reaching an agreement for the joint transaction of business in China and eventually for the reorganization under like conditions of the wine and tobacco administrations. At that time the French bank alone was guaranteed by securities constituting a lien upon the revenues of these administrations.
In closing I must inform Your Excellency that but a few days ago at Peking Mr. Bruce, the representative of the Pacific Development Company, called upon the director of the agencies of the Banque Industrielle of that city and expressed the desire to ratify an arrangement regarding the execution of the loan contract of $25,000,000. The matter is now in course of negotiation between them. I will not dissimulate the fact that the preferences of the Government of the Republic inclined toward reserving any such loans and undertaking in China solely to the groups forming part of the consortium and I am aware that the Government of the United States [is] responsive to this feeling. Nevertheless, should it prove really impossible to prevent the execution of the contract of the Pacific Development Company I would see but advantages in the conclusion of an agreement between that company and the Banque Industrielle. It would on the other hand be possible eventually when all obstacles to the operations of the consortium have disappeared to hand over the business transaction in question to the latter organization.”