893.51/3722: Telegram
The Minister in China ( Schurman ) to the Secretary of State
[Received February 14—9:29 a.m.]
45. My 4, January 3, 10 p.m. Consortium not having accepted Chinese Government’s proposal for refunding and consolidating salt surplus debts, an agreement therefore was ratified yesterday between Government and Chinese and Japanese banks holding such debts which follows general lines of proposal to consortium.
Service of new bonds will be through participating Chinese and Japanese banks. This will correspondingly reduce service of salt tax moneys by Reorganization Loan banks except of course Yokohama Specie Bank.
Of debts refunded by new bonds about 60,000,000 silver dollars held by Chinese and 30,000,000 Japanese.
Refunding agreement provides for automatic transfers of securities from salt surplus to customs increase due to effective 5 percent thus favoring these Chinese and Japanese salt surplus debts over other foreign debts, including American, which together aggregate over 100,000,000 gold dollars. I have objected in a conversation with Stevens15 to this preference and he concurs.
Please advise whether Conference in authorizing increase of customs duties left China free to mortgage it without the consent of powers thereon as conferring a preferential security for one group of debts over debts of other nationals including past-due American debts and to put Chinese debts on a parity with foreign debts in the matter of security.
Assuming Conference reservation of customs increase for refunding foreign debts I consider such increase best hope by far for American creditors.
- Frederick W. Stevens, representative of the American group.↩