493.11/835: Telegram
The Minister in China ( Schurman ) to the Secretary of State
[Received July 25—9:50 a.m.]
320. Your 177, July 19, 1 p.m., last paragraph [sentence]. Yes. It was deemed impossible to secure agreement for postponement of indemnity payments.
Proposal to make monthly advances of $2,500,000 for six months is conditional on Chinese Government agreeing to undertake and carry out consolidation of unliquidated Chinese and foreign debts within six months.
British Government telegraphs Peking that they “Cannot agree to 2½ percent customs surtax being utilized as security for loans in anticipation of findings of Tariff Commission as to allocation of increased customs revenue.”
Consortium representatives here reconsidering details of plan in recent meeting[s] of which last held yesterday and another called [Page 781] for today. We have submitted a number of suggestions through Lynch who is in close touch with us. Revised plan of consortium representatives will be considered by four Ministers at a meeting called for tomorrow.
Consortium representatives here in revised plan meet above-mentioned objection of British Government by basing debt consolidation on the security of (a) customs revenue; (b) wine and tobacco tax to be collected under a reorganized administration with foreign assistance; (c) salt revenue; (d) railway and other revenues of the Ministry of Communications. They also stipulate that: “consolidation plan besides having for its object funding or liquidation of all overdue payments in respect to Chinese Government loans or advances, domestic or foreign, and unpaid accounts of claims of foreign firms, societies or individuals which have been admitted by Chinese Government, should also include measures for the protection of Chinese Government loans which, in the estimation of the group, are inadequately secured, and for satisfying holders of Chinese Government bonds and coupons issued in Germany and Russia.”
Will telegraph further details after tomorrow’s meeting of the Ministers.