893.51/3983: Telegram
The Secretary of State to the Minister in China ( Schurman )47
243. Your telegram No. 384, September 26, 6 p.m.48
British Embassy informs the Department that the Crisp interests disregarding the wishes of the British Government are proposing to negotiate a loan for the purpose of refunding Vickers, Marconi, Pacific Development and Chicago Bank loans; this loan to be secured on surplus customs and salt revenues and to be floated partly in the United States. British Government considers Crisp proposals detrimental to the policy of supporting the Consortium and Embassy has informally asked the attitude of the Department on this question.
The measure of support to be given by the respective Governments to the Consortium or to their national groups therein is formulated in this Government’s note of July 3, 1919,49 which was subsequently accepted by the interested Governments and incorporated by the banking groups in the Consortium Agreement of October 15, 1920.50 This provides for complete support in operations actually undertaken and in seeking specific loan contracts in the event of competition therefor.
In the present case it does not appear that the Consortium has undertaken operations with respect to the business sought by Crisp, and it is a question whether it may in fact be considered to be seeking such business in competition with Crisp. It appears rather that, while adopting a more or less receptive attitude towards certain Chinese proposals for the funding of unsecured and defaulted obligations, the Consortium cannot at this time be said to be competing for such business or any portion of it. So long as that remains the case, this Government would not feel warranted on principle in going beyond the already extensive measure of support assured to [Page 788] the Consortium and regarding other legitimate undertakings as barred by the mere fact of their being independent of the Consortium. As you are aware, this Government is hopeful of the eventual possibility of constructive assistance to China from the Consortium, and with that hope in view is prepared to give all appropriate assistance to that end, in those cases where the Consortium is acting or seeking the opportunity to act; but it cannot so extend its agreed measure of support as to make it a monopoly which would preclude support or countenance to any legitimate interests which may undertake business with which the Consortium does not desire to concern itself.
Your telegrams indicate that it is proposed to secure Crisp and other loans upon 2½ per cent customs surtax to be established in pursuance of Article II of the China Tariff Treaty of February 6.51
The Department fully approves your opinion that it is for the Special Conference under Article III to determine the purposes and conditions of that surtax and that to permit the hypothecation of that proposed revenue in advance of such determination would render nugatory the whole work of the Special Conference.
You may therefore make known to the Chinese Government, to your colleagues, and to such American citizens as may be interested, the fact that this Government cannot recognize the validity of any hypothecation which it may be sought to place upon the surtax between the signature of the Customs Treaty and the recommendations of the Special Conference in the matter; and that it will instruct its representative on the Special Conference that no rights or equities of any sort are to be recognized as flowing from any such attempt to forestall the determinations expressly provided, for by the Tariff Treaty.
- The substance of this telegram was communicated by the Chief of the Division of Far Eastern Affairs, Department of State, to the Secretary of the British Embassy in a letter dated Oct. 18 (file no. 893.51/4014a).↩
- Not printed.↩
- Foreign Relations, 1919, vol. i, p. 463.↩
- Ibid., 1920, vol. i, p. 576.↩
- For text of treaty, see ante, p. 282.↩