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

My Dear Mr. Ailes: The Department is in receipt of your letter of June 7, 1923, transmitting the original of a letter from Mr. E. M. Byrnes of the National City Company, New York City, of date June 6, 1923,59 on the subject of the recently proposed loan to the South Manchuria Railway Company and of earlier proposals; and attention has been given to Mr. Byrnes’ detailed account of his conference with officials of the Department in 1919 and of the negotiations between the National City Company and the Company’s representative in Japan at that time.

The reference in the second paragraph of your letter to the first paragraph of the fourth page of Mr. Byrnes’ letter, and the inquiry whether if the loan now under consideration were issued in this country and all the proceeds thereof were spent for equipment and materials in this country the State Department would have any objection to this negotiation and flotation, are noted.

In reply, I would refer again to the explanation given orally in connection with discussions of the loan to the Oriental Development Company and repeated in the Department’s letter to you of May 23, 1923, that, in the opinion of the Department, it is as a matter of general policy not desirable that American credit be placed at the disposal of foreign interests for investments 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 enterprise or to further the organization of competition therewith. In the view of the Department, this broad statement of principle is not properly susceptible of modification on the basis of a specification that a given portion or all of the proceeds of a particular loan shall be devoted to purchases in the United States.

I regret, therefore, to have to inform you that the Department’s view of this proposal remains as set forth in the Department’s letter of May 23, 1923.

I am [etc.]

Leland Harrison
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