893.51/4293

The American Group to the Secretary of State

Proposed Consolidation Loan

Sir: Referring to our letter of May 5th,59 we enclose copy of cablegram No. 4616 received by us yesterday from Messrs. Morgan, [Page 542] Grenfell & Co., London, giving text of the message cabled on May 10th to Peking in reply to the joint telegram from the four group representatives of April 28th.60

This cablegram also contains text of another joint message from the Peking representatives to which we call your particular attention, and should be glad to receive your observations thereon.

Respectfully,

J. P. Morgan & Co.
For the American Group
[Enclosure—Telegram]

Messrs. Morgan, Grenfell & Co., London, to Messrs. J. P. Morgan & Co.

4616. 2107. Following telegram despatched to Pekin today with approval of T. W. Lamont:

The following is for four groups. After careful consideration of your joint telegram of April 28th, it is with much reluctance and regret that we find ourselves unable to agree to your proposals with regard to cash advances.

In our view the effect of the considered Consortium policy of abstention from administrative advances has, on the whole, proved of benefit to conditions in China, and we are not convinced that the time has yet come to abandon it, nor does the present Cabinet appear to contain a sufficient element of stability to justify such a course or to afford reasonable hope of forming the nucleus of a stable central government.

It is recognized, however, that the question of cash advances may arise in a different form in connection with the floating debt, the examination of which was authorized in our telegram of April 30th, and with which we hope it may still be possible for you to proceed.

Hongkong & Shanghai Banking Corp. have today received following cable from Pekin dated May 9th which has crossed the above:

The following is for four groups. Re our telegram of April 28th, in view of recent outrages on Tientsin-Pukow Ry.61 which is regarded here as gravest act of barbarism since Boxer siege, it is evident that our negotiations cannot be pursued on the lines contemplated, but on conditions of far-reaching nature which doubtless will be fully considered by our governments. We consider, however, that if your Ministers here had authority to promise financial assistance on conditions to be determined by them and as part of debt consolidation scheme, it would give them powerful leverage in securing acceptance of their demands which the Chinese fully expect to be of a drastic [Page 543] nature. It appears to us that the powers have a great opportunity now of putting an end to military misgovernment in this country, which is a rapidly increasing danger to life and property, and is a fundamental obstacle to any attempt at reform.

Sir Charles Addis proposes to reply that message has been communicated by groups to their respective governments whose observations are awaited. Cable if you approve.

  1. Not printed.
  2. See telegram from the British group to the American group, supra.
  3. See pp. 631 ff.