893.51/4987

The Chinese Ministry of Foreign Affairs to the American Legation37

[Translation]

Memorandum

The Ministry of Foreign Affairs presents its compliments to the Legation, and has the honor to acknowledge the receipt of the Legation’s memorandum (No. 285, of August 24, 1926),38 stating that it has been rumored that the Chinese Government will float a new domestic loan to be secured by Customs surplus funds, and filing a protest.

The matter was referred by this Ministry to the Ministry of Finance, from whom a reply has been received, stating:

“We have the honor to recall that the various friendly Powers at the Washington Conference in 1921, observing that our Central Government was in financial straits, drew up the Customs Treaty, providing for an increase in the Customs Receipts to afford relief. However, more than four years passed before the Special Customs Conference could finally be convoked; moreover, up to the present time we have not obtained any actual benefit from the Customs increase allowed us by the Washington Conference. Hence, we were without resource.

“With a view to getting together several months’ administrative expenses for the Central Government it was proposed to float a loan, using the security for the consolidated domestic loans. This plan designated as security the funds hitherto set aside from the Customs surplus as security for internal obligations, and did not contemplate making additional appropriations from the Customs funds. The matter fundamentally does not affect creditors of the various nationalities.

[Page 962]

“As to the consolidation of China’s various foreign obligations which are without security or whose security is inadequate, the Government earlier stated with sincerity that it is only necessary for the Customs Conference speedily to resume its sessions and conclude its deliberations, when there will naturally be means of meeting this category of foreign obligations. The various Powers should not be over-anxious.”

  1. Copy transmitted to the Department by the Chargé in China as an enclosure in his despatch No. 790, Oct. 20; received Nov. 26.
  2. See telegram No. 346, Aug. 24, from the Minister in China, p. 957.