500.A4e/586: Telegram
The American Delegation to the Secretary of State
[Received May 13—6:11 a.m.]
38. With regard to reference made in the Department’s telegram May 7, 4 p.m.,66 to the conversations in Washington between Wellesley and MacMurray concerning debt consolidation, it is the personal recollection of MacMurray, Hornbeck and Perkins, all three of whom were present during these conversations, that the understanding was the consolidation of the unsecured debts might be left out of the scope of the Congress if such consolidation could be previously effected by a refunding operation based upon salt surplus and that it was not understood that these debts could in any event be left out of consideration.
The Department’s position on this subject was furthermore definitely stated in its telegram to London number 67, March 26, 1923,67 the contents of which the Embassy was instructed to communicate to Wellesley. His comment in reply was reported to the Department in London’s number 140, May 2, 1923.67
With regard to the subsequent attitude of the British Foreign Office, see Perkins’ confidential report to the Department July 29, 1925.67
It should also be borne in mind that the views expressed in 1922 contemplated merely the disposal of funds to accrue from the Washington surtaxes, an amount regarded as insufficient adequately to refund the whole floating debt of the Chinese Government, whereas now after a lapse of almost four years we are confronted with an entirely new situation. We are now proposing to raise almost treble the amount of new revenue calculated to accrue from the Washington surtaxes, the whole situation having become such that if something is not done about the debts along with other matters in the near future the Chinese Government may take action which will put it forever out of our power to deal effectively with it.