893.51/2730
The Japanese Embassy to the Department of State
On February 3, 1920, the American, British, French and Japanese Representatives at Peking agreed to authorize their respective [Page 639] banking groups to undertake in common an Emergency Loan of £5,000,000, and they presented to the Chinese Government a joint Memorandum embodying the essential conditions of such Loan. On February 7, the Chinese Government signified acceptance of these conditions, and at the same time requested that in the event of the Loan not being realized by the end of the Chinese Calendar year, an advance of Mexican $7,000,000 would be made at once to meet China’s immediate need.
Thereupon, the Representatives of the four Powers at Peking, and also the Banking Groups concerned, have conferred with one another, in an effort promptly to arrange either the Emergency Loan or the advance requested by the Chinese Government. Those discussions have however failed to show any appreciable sign of progress.
On the other hand, hard pressed by the financial stress in view of the approaching Chinese New Year (February 20), the Chinese Government repeatedly applied to the Japanese Government for an early arrangement of the advance in question. Accordingly, under instructions of the Japanese Government, Mr. Obata and the Japanese Banking Group approached the American Chargé d’Affaires at Peking and the American Banking Group respectively, with a view to arranging that the advance would be made jointly by the American and Japanese Groups as an emergency measure. The proposals remained also unanswered, owing presumably to the dislocation of telegraphic communications.
In the meantime, the Chinese New Year came close at hand, and the Japanese Government, finding themselves unable to refuse any longer the urgent request of the Chinese Government, finally decided to authorize the Japanese Banking Group to make an advance of Yen 9,000,000, as an equivalent of Mexican $3,500,000, representing one-half of the total advance desired by the Chinese Government. In giving such authorization, they were confident that the special circumstances calling for this decision would be fully appreciated and approved by the Governments and Banking Groups concerned in the undertaking. The contract respecting the advance of Yen 9,000,000 was signed between the Japanese Group and the Chinese Ministry of Finance on February 19.
At the same time, placing particular importance on the maintenance of co-operation between the American and Japanese interests, the Japanese Government consistently sought to pave the way for American participation in the advance, and at their suggestion, a clause is inserted in the contract of the advance payment, to the effect that in case of American participation, the terms of that contract are subject to modification to conform with the proposals of the American Group. It is sincerely hoped that the American [Page 640] Group may be persuaded to participate in the undertaking and to make an advance for the remaining share of Mexican $3,500,000.
It is known that the sum of Yen 9,000,000 advanced by the Japanese Group falls short of China’s immediate requirements. In this situation, pending arrangement with the American Group for the remaining one-half of the total advance required, the Chinese Government have been urgently requesting the Japanese Government to authorize the Japanese Group to make a further advance of at least Yen 4,000,000 (corresponding approximately to Mexican $1,500,000) on the understanding that this sum shall be redeemed out of the proceeds of the advance whenever made by the American Group. The Japanese Government, however, have been withholding authorization to the Japanese Group for such additional advance, in the hope that the American Group may soon be ready to participate in the advance reserved for that Group.