893.51/3507: Telegram

The Chargé in China ( Ruddock ) to the Secretary of State

[Paraphrase]

322. It is quite probable that Abbott will be able to make loan agreement with Government of China effectively providing for placing the administration of the wine and tobacco taxes under the joint supervision of an American. The Chicago Bank can supply you with detailed information. In Abbott’s mind there is great doubt as to the ability of the Chinese Government to satisfy him that the cash income from that source is sufficient for the service of the loan proposed. For this reason he may decline further negotiations and is thinking of notifying the Government to that effect before midautumn settlement day which comes September 16.

Does the American Government consider it of value or interest to have such control established over a tax which is of potential value? The Chinese Government states that there is no prospect that Abbott’s loan will be paid when it falls due, in any eventuality, including the possibility of an inter-financial commission, however remote that may be.

Ruddock