893.51/5048: Telegram
The Chargé in China (Mayer) to the Secretary of State
[Received August 31—6:36 a.m.]
846. 1. Following from American consul at Shanghai:
“August 30, 10 a.m.
- (1)
- The Shanghai Foreign Exchange Bankers Association brought to the attention of the consular body a recent notice issued by the Nanking authorities calling upon all holders of Chinese Government National Loan Bonds to register their bonds at an office established in Shanghai for that purpose. The notice stipulated that registration would be allowed only on condition that each holder subscribe for an amount of the 60 million salt surplus Treasury bonds equal to ten percent of the nominal face value of the bonds presented for registration. The time limit for such registration is September 30, 1927, after which all unregistered bonds will be declared null and void.
- (2)
- The association states that many of its members hold bonds on behalf of customers and in some cases these bonds are lodged in Europe or America thereby necessitating immediate action, and it requests an early opinion from the consular body as to whether the demand of the Nationalist Government must be acceded to by it or not.
- (3)
- American bankers are not substantial holders of these bonds but are interested in protecting the interests of Chinese correspondents who are large holders.
- (4)
- The consular body decided to inform the Nanking Government that the members of the consular body cannot admit the legality of such a procedure and that they reserve the right to claim compensation for any loss suffered by their nationals.
- (5)
- It is considered that the above action is but an ordinary consular function to take all necessary steps to protect American interests; but, if a contrary opinion is held by the Legation or the Department, proper instructions are requested since the communication to the Nanking authorities will not be forwarded before September 3rd.”
2. Nanking Ministry of Finance on June 28 issued an order that the district salt inspectorates should cease to function as from July 1st. This action was followed by an announcement of the flotation of a loan of 60 million dollars to be secured on the salt revenues of Kiangsu and Chekiang. The proposed loan was at once protested by order of the chief salt inspectorate at Peking. Mail despatch on the foregoing, dated August 2nd, now en route to the Department.
3. I am informing Cunningham that his telegram is being repeated to the Department. I concur in his views that the proposed protest is necessary as a precautionary measure to avoid the possibility of any impairment of American interests through a failure to go on record against this confiscatory action of the Nanking authorities. It is respectfully [Page 407] suggested that the Department communicate direct to Cunningham and repeat to the Legation should it desire him to act differently.