893.51/5123: Telegram
The Minister in China (MacMurray) to the Secretary of State
196. My despatches 1716, October 24, 1928; 1820, December 29, and 1832, December 31.79
On my return I received three letters dated March 16th from the American group representative in Peking80 of the Hukuang Railway loan group banks,81 copies of which are being forwarded by mail,79 in [Page 821] which Mr. Bennett points out that an ever-increasing domestic debt is being given priority of chargé on the customs revenues over long overdue or defaulted foreign loans. He states that this discrimination against foreign bondholders is a matter of serious concern to the financial groups involved and expresses the hope that I will lodge a protest with the Nationalist Government.
After listing charges reported to have been, imposed upon the available customs surplus in favor of domestic loans (amounting to approximately $200,000,000 in the past year alone, the latter item being a $50,000,000 loan authorized in January for the purpose of “troop disbandment”), he states that:
“The only provision made from this source (customs revenue) in favor of the foreign issued Chinese Government loans secured on the general resources of the Government and enjoying, under the terms of the loan agreements, a preferential claim on the customs surplus generally and the increased revenue derived from the revised tariff in particular, consists of the Chinese Government’s undertaking, contained in their decision of January 4th last, to set aside from the increased revenue the sum of $5,000,000 annually for the consolidation of domestic and foreign debts [reference my despatch 1932, February 21].82
It may thus be said that the financial policy of [the] Nationalist Government up to the present time follows the line of reserving almost exclusively to the holders of recently issued domestic obligations the sole national security of any substantial value under present conditions, leaving the holders of prior foreign obligations to appeal in vain for the satisfaction properly due to them, while other foreign obligations of the Government incurred for materials supplied and now long overdue also remain unsettled.”
2. I venture to recommend that I be authorized to take up the matter with the Minister of Foreign Affairs either jointly or coincidently with my French, British and German colleagues to whom their group representatives have sent similar communications.
- Telegram in three sections.↩
- None printed.↩
- Charles R. Bennett, manager of Peking branch, National City Bank of New York.↩
- American, British, French, German. For signing of loan agreement on May 20, 1911, see Foreign Relations, 1912, p. 87.↩
- None printed.↩
- Brackets appear in the Minister’s telegram.↩