The Secretary of State to the Ambassador in Japan (Warren)

No. 18

Sir: Receipt is acknowledged of your despatch No. 872 of June 27, 1921,90 in which you state that the Japanese Government has requested certain information regarding the Pacific Development Corporation’s option for a loan to China and particularly whether any further understanding with the Chinese Government has been reached regarding the duration of the option under the loan agreement between the Chinese Government and the Corporation.

As the Japanese Government has already been duly informed the Pacific Development Corporation’s option under its loan contract with the Chinese Government of November 26, 1919, had been merged into the Consortium, arrangements to that end having been entered into between the American Group and the Pacific Development Corporation. According to the resolutions passed at the meeting of the Groups’ representatives at New York in October, 1920, it was resolved that the American Group be requested, if it deemed wise “to take over for its own account for the benefit of the Consortium” the Pacific Development Corporation’s loan.91 On February 18, 1921, the American Group notified the Department that it had definitely decided not to take up the option offered to it by the Pacific Development Corporation.92 In view of the above it is the opinion of the Department that the Pacific Development Corporation is now free to enjoy all rights which originally belonged to it under the contract of November 26, 1916 [1919], subject only to the terms of a loan advanced by the American Group to the Corporation upon the security of the Chinese notes already issued. In view of the fact that the Chinese Government is still in default as regards the performance [Page 398] of its part of the said contract, considering that it has never permitted the functioning of the Associate Inspector General of the Wine and Tobacco Administration as provided by Article 10 of the Loan Agreement of November 26, 1919, the Department regards the option granted to the Pacific Development Corporation in Article II [11] as still in force in view of the default of the Chinese Government hereinbefore mentioned.

I am [etc.]

For the Secretary of State:
F. M. Dearing
  1. Not printed.
  2. See minute xv, Foreign Relations, 1920, vol. i, p. 586.
  3. Ante, p. 386.