500.A4e/605: Telegram

The American Delegation to the Secretary of State 73

Conference number 44. Your number 30, June 10, 6 p.m.74 quoting cable [sic] British Foreign Office. The British cable evidences misconception of the underlying purpose of debt consolidation which is not so much one for the satisfaction of China’s foreign creditors as it is for the reestablishment of China’s credit, which is necessary [Page 759] condition precedent to continuation of China’s foreign trade and her development.

2. Rebellious and impatient attitude of China’s foreign creditors is caused not so much by their failure to receive payment of their debts as by the persistent ignoring and violation by the Chinese Government of its contracts with foreign creditors and the superimposing of domestic loans ahead of the foreign debts, the proceeds of which loans have been devoted to carrying on of useless wars.

3. The British cable evidences solicitude that if the powers are too insistent upon an orderly consolidation of China’s debts it will prejudice British trade. On the contrary we believe that the leading Chinese merchants and bankers will agree with foreign traders and creditors that the reestablishment of China’s credit is her most vital problem. The thoughtful Chinese welcome an equitable debt consolidation to that end.

4. We would be doing a great injustice to the Chinese people as well as to foreign trade if we agreed upon treaty largely increasing China’s revenue without consolidating her debts and attempting to reestablish her credit. Unrestrained by such obligation the Chinese Government would continue in the future as it has in the past to dissipate all the revenue in the perpetuation of useless wars.

5. There is no protest from the Chinese delegates against the participation of foreign powers in evolving plan for a debt consolidation. Principal arguments have arisen among the powers themselves as to the rates of interest and as to what debts should be included.

The conferences respecting debt consolidation were continued until the British delegates refused longer to sit, and the two members representing them in this phase of conference work left for home (see our telegram number 35, May 4, 6 p.m.).75

Am[erican] Tar[iff] Del[egation]
  1. Copy of this telegram was enclosed in Department’s instruction No. 569, June 23, to the Ambassador in Great Britain, with instructions to bring the contents informally to the attention of the British Foreign Office.
  2. Not printed; it summarized despatch No. 1045, May 28, from the Ambassador in Great Britain and the British memorandum enclosed, p. 755.
  3. Not printed.