The Secretary of State to the Chargé in China (Tenney)
35. Supplementing the Department’s telegram No. 29 of February 2, 5 p.m.
The American Group as part of the so-called Chinese Consortium, informs the Department that it has been carrying on conferences with officers here of Pacific Development Company with the hope that the Development Company would see fit, upon payment of the 5,000,000 dollars already advanced, to turn back to the American Group, and thus to the custody of the Consortium, when formed, the present loan contract, including the provisions with respect to the wine and tobacco tax. In case such an arrangement should be brought about then all four of the international groups as one will hold the loan contract in question. In this way the interest of no one national group will be prejudiced; particularly the interest of the Japanese nationals will not suffer under such a happy solution of this particular question.
The American Group furthermore informs us that in connection with the present negotiations for emergency loan of 5,000,000 sterling it has received through the Department the suggestion of the Japanese Minister that a temporary advance should be made, and it hopes that it will be possible for the American Group, in conjunction with the Japanese Group, to make such a temporary advance as soon as the amount of same is made known, and as soon as word is received from the Chinese Government that the loan terms proposed by the American and Japanese Groups are in effect acceptable.
In view of all the foregoing the Department desires strongly to point out to the Chinese Government the advisability of allowing present status as to the so-called Pacific development loan to remain for the moment undisturbed, leaving negotiations for the transfer of this loan to the good offices of the American Group, and of thus refraining from negotiating any present loan with the Japanese Okura firm.
The Department points out further that Mr. Lamont, of the J. P. Morgan and Company, the head of the American Group, is starting next week for Tokyo, where he hopes to arrive at the end of this month, or the very beginning of March, and his visit will afford ample opportunity to discuss, and we hope adjust all these outstanding matters. The desirability of making no new move which might serve further to complicate the situation pending Mr. Lamont’s visit is manifest.[Page 628]
The above is being telegraphed to Tokyo which will communicate for your information the Department’s further instructions to it.