Office of the Historian

893.51/2690: Telegram

The Acting Secretary of State to the Ambassador in Japan (Morris)

[Paraphrase]
Washington, March 6, 1920—9 p.m.

77. Department received on the 29th your delayed telegram no. 46 of February 15, 3 p.m.94 While an answer to the note which it contained was being drafted, there was a change of conditions due to the receipt on March 295 of a new note from the Government of Japan. The Department is now considering this note which apparently makes it not necessary at present to answer the first one. Nevertheless, for your information the following statement is sent giving our [Page 638] attitude on the several questions presented in the communication contained in your no. 46.

1.
Unless the Department should find it impossible to form the consortium, it will remain our policy to refrain from giving diplomatic support to the Pacific Development Corporation in its loan to China. If we should become convinced that the consortium cannot be formed the Department would consider itself under obligation to give its full backing to every proper and legitimate financial agency which might desire to enter the Chinese business field and would use every possible means for that purpose.
2.
The American group cannot utilize the promised exclusive support of our Government until the consortium is completed, with the result that in the meantime we are unable to use the full force of our influence to keep independent companies from operating in the field.
3.
We are in complete agreement that the loan under consideration was concluded because there has been so much delay in forming the consortium, for which the blame rests entirely upon Japan.
4.
The Continental Trust and Savings Bank of Chicago contracted a loan agreement in November, 1916,96 which gave it an option on future loans having the tax on tobacco and wine as security. The Pacific Development Corporation was simply replacing the Continental Trust and Savings Bank in concluding the present loan.
5.
When negotiations were delayed because the Chinese wished to make certain substitutions in securities, the Continental would not complete the contract. This action was taken at our request. It was then that China allowed the Pacific Development Corporation to replace the Continental.
6.
In the action it took the Pacific Development Corporation was not interfering without justification, or if it was, the offense was only against the United States and the American people.
7.
The United States did in fact suggest that until the two sections of China should compose their differences, money should not be lent to that country. In our telegram of October 22, 5 p.m.97 we explained why we approved the Chicago loan. The Pacific Development Corporation, as already explained, did not consult our Government in making its loan.
Polk
  1. Ante, p. 632.↩
  2. Ante, p. 500.↩
  3. Foreign Relations, 1916, p. 138–143.↩
  4. See ibid., 1919, vol. i, footnote 24, p. 527.↩