The Second Assistant Secretary of State (Harrison) to the President of the Riggs National Bank (Milton E. Ailes)

My Dear Mr. Ailes: The Department is in receipt of your letter of April 23, 1923,56 transmitting a letter from Mr. Victor Schoepperle of the National City Company, New York City, of date April 21, 1923,56 who stated that he had been advised by the Company’s representative at Tokio concerning reported negotiations by the South Manchuria Railway Company for a loan, presumably in the British market, and inquiring whether the Department of State would have any objection to dollar financing, assuming that the proceeds of any loan floated in this market would be spent partly in the United States and partly within the sphere of the Company’s operations in Manchuria.

Mr. Schoepperle’s letter states that the files of the Department will show that in 1919 the financing of the South Manchuria Railway was discussed with Mr. Breckinridge Long57 and that at that time the Department perceived no objection to the proposition, and Mr. Schoepperle wishes that you take up the question now with this Department with a view to obtaining a preliminary opinion before the National City Company replies to the inquiries which it has received. You ask informally whether it is agreeable to the Department that the National City Company should proceed with negotiations respecting this matter.

With respect to Mr. Schoepperle’s reference to discussions of the financing of the South Manchuria Railway in 1919, the records of this Department do not disclose that action was taken definitely committing [Page 508] the Department in favor of that proposal. Subsequent to that time the matter appears to have been dropped, and several years have elapsed.

With reference to the present proposal, I desire to remind you of the explanation given, in connection with discussions of the loan to the Oriental Development Company, of the view held by this Department that, as a matter of general policy, it is not desirable that American credit be made available to foreign interests for investment or enterprises in third countries in cases in which the use of such American credit would tend to prejudice or circumscribe the opportunities for American enterprises or to further the organization of competition therewith.

I regret, therefore, to have to inform you that the Department does not regard with favor the idea of floating in the American market a loan such as that to which you refer.

I am [etc.]

Leland Harbison
  1. Not printed.
  2. Not printed.
  3. Then Third Assistant Secretary of State.