The American Group to the Secretary of State

Sir: We beg to acknowledge receipt of your letter of November 5th,29 … relative to the Hukuang coupon situation, and referring to paraphrase of cable of September 1st, from the American Embassy at London,30 in which the British Foreign Office expressed uncertainty as to whether it is the intention to suggest that the protest to China be extended to cover all bonds of German issues regardless of their ownership since the time China entered the war.

At the time of the Consortium meetings here it was brought out that the Hukuang issue was in somewhat different position from the two other so-called German issues, which were placed originally in the British and German markets, in that the Hukuang issue was listed in its entirety here, while the other issues were listed in London only to the extent the bonds were originally placed there.

The members of the Consortium therefore were rather sympathetic to the American view that a reason existed for insisting upon [Page 671] the full recognition of the Hukuang issue, which might be wanting in the case of the other two loans. After full consideration, the Consortium adopted unanimously a resolution recommending that China recognize the Hukuang bond issue in full without distinction, but making no reference to the other German issues of Chinese loam The British Foreign Office has no doubt been advised by the British of this action.

Since the close of the Consortium meetings the American Group, after an informal discussion with the representatives of the other Groups, has set forth for the information of the representatives in Peking the basis upon which it felt it would be possible to discuss a loan negotiation. One of the conditions precedent to such a negotiation would be the clearing up in full of the situation as to the German issue of the Hukuang bonds. This memorandum was forwarded to the American Group’s representative in Peking through the Department.

It would seem to the American Group therefore that until the representatives in Peking have opportunity to discuss these proposals with the Chinese Government, it might perhaps be as well for the Department to suggest that the British Foreign Office take no present step in the matter of a joint protest.


J. P. Morgan & Co.
For the American Group
  1. Not printed.
  2. Ante, p. 657.