The American Group to the Secretary of State

Sir: In view of the recent change in the Administration at Washington, we beg to request that you will, at your convenience, inform us as to whether the policy of the Department, up to the present time, in encouraging American interests in the assistance of China through the operations of the International Consortium, is in accord with your own views and therefore receives your approval.

The officials of the Department will undoubtedly inform you from the record that the principle involved in cooperative effort for the assistance of China was approved by the Department under Secretary of State Knox. Secretary Bryan, however, upon taking office adopted a different point of view, and the American Group thereupon withdrew from the then Consortium.

In June 1918 the Department reconsidered the matter and suggested the formation of a new American banking group made up [Page 359] upon a broader basis than before. Such a banking group was organized, now comprising between thirty and forty members including practically all of the leading institutions and banking firms showing any interest in the Far Eastern situation. (A list of these members43 appears on this letterhead). Upon the tentative formation of the American Group, the Department requested the Governments of Great Britain, France and Japan to encourage the organization of similar groups in the countries mentioned in order to form an international consortium or partnership. The Governments in question having approved in general the principle set forth in the Department’s memorandum, a meeting for the purpose of organizing the Consortium was convened at Paris in May 1919. The tentative organization effected at that time was not then completed owing to the insistence of the Japanese Government that the Japanese banking group make certain reservations as to the exclusion from the operations of the Consortium of certain portions of Mongolia and Manchuria.

The Japanese Government still maintaining its attitude on this point, Mr. Lamont, representing the American banking group and in effect the British and French Groups, and with the approval of the Department, last year visited Japan and China. There in cooperation with the Department’s representatives a formula was arranged under which Japan withdrew the reservations in question. Thereupon a meeting of the various national group representatives was held in New York last October, resulting in the final formation of the Consortium, following which a statement of its scope and purposes44 was issued with the approval of the Department, and of the British, French and Japanese Foreign Offices.

The Department, in conjunction with the British, French and Japanese Foreign Offices, has just formally notified the Chinese Government of the formation of the Consortium, and has furnished to it copies of the Consortium Agreement. The Consortium has as yet received no formal application for a loan or loans from the Chinese Government, and in the present state of the financial markets of the world hopes that China’s needs will not call for any early loan.

In closing, we should make clear the fact that the operations of the Consortium are in no way designed to interfere with the private initiative of our nationals or those of any other country. On the contrary, the Consortium does not plan to undertake any mercantile, industrial, or banking projects. The plan is simply to help China [Page 360] in the establishment of her great public utilities such as the building of her railways, canals, etc., thereby assisting in stabilizing China economically and financially, and making that field a safer one for the initiative of our citizens in private enterprises in commerce, industry, etc.

If there are any points in the foregoing brief summary that are not perfectly clear to you, or if at any time you desire to confer with a representative of the American Group, Mr. Lamont will be glad to proceed to Washington.


J. P. Morgan & Co.
For the American Group
  1. Not printed.
  2. For text of statement, see telegram no. 405, Nov. 2, 1920, to the Chargé in Japan, Foreign Relations, 1920, vol. i, p. 591.