894.51 So 8/18a: Telegram

The Secretary of State to the Chargé in China ( Mayer )


397. The question of a loan to the South Manchuria Railway has not developed beyond the point described in our telegram 385, November 21, noon. Bankers have not as yet presented to the Department any definite proposal upon which a decision could be reached and no press statement has been made on the subject.

There was considerable publicity here due to statements in Tokyo by the president of the South Manchuria Railway, republished here, and to a call at the Department by Mr. Lamont. As a result, at the press conference of November 25 the correspondents inquired whether it was likely that negotiations for a loan to the South Manchuria Railway would influence in any way American attitude toward China. The correspondents were informed that the Department regarded a loan by private bankers to the South Manchuria Railway as a private matter and not one in which the Government [Page 490] was particularly interested. One correspondent raised the question whether if such a loan were made by American bankers it would presage recommendation [recognition?] of Chang Tso-lin by the American Government. The correspondent was told that it would not. The Secretary in reply to an inquiry said that the correspondents could print that in substance his attitude toward the proposed loan would be that it is not a question in which this Government has any particular interest and that it was a private matter. The subject was again brought up on November 30 when a correspondent inquired whether a project for a loan to the South Manchuria Railway had been formally presented to the Department. He was told that no such project had been formally presented. The same correspondent called attention to press reports that Chang Tso-lin was concerned about the proposed loan. The correspondent inquired whether the Department’s attitude that the loan was purely a private matter might be influenced if the reports of Chang’s views were correct. No comment was made in reply to this question.

The Department wishes you to refrain from commenting on the matter other than to say that you understand that no definite proposal has as yet been presented to the Department. Should such a proposal be made the Department will not fail to inform you of it and of the Department’s decision in the matter.

Please continue to telegraph information with respect to the Chinese reaction on this subject.