893.51/5178
Memorandum by the Assistant Secretary of State (Johnson) of a Conversation With Mr. George Bronson Rea of Shanghai
Mr. Bronson Rea called and stated that last week while he was in New York he received a telegram from Sun Fo asking him to approach the American Government and American bankers in order to ascertain whether there would be any possibility of floating a loan in the United States for the purpose of purchasing back the Chinese Eastern Railway.89 Mr. Rea stated that he took the matter up with Mr. Lamont and Mr. Martin Egan of Morgan & Company, New York, that he realized there was no use in his coming to the Government as the best way to do would be to put it up to the bankers and let the bankers take it up with the Government. I told Mr. Rea that I felt that was the best way to handle such a proposition, as we as a Government were not particularly interested in the matter.
Mr. Rea stated that Mr. Lamont had asked him for a memorandum of the matter and he had given Mr. Lamont such a memorandum and that he did not expect any answer from Mr. Lamont until this week. He stated that he understood that Mr. Lamont would have to telegraph to the other members of the Consortium and he speculated on, the unlikelihood of France consenting to such an arrangement. He stated that the immediate reaction of Mr. Martin Egan was that such a loan would be possible on condition that there was some guarantee that the road would be free from military operations and in addition [Page 826] that there would be some guarantee that the bondholders would have a good return on their money. …
I pointed out to Mr. Rea that Paragraph 2 of Article X [IX] of the Agreement on General Principles for the Settlement of the Questions between the Republic of China and the Union of Soviet Socialist Republics signed in Peking on May 31, 192490 reads as follows:
“The Government of the Union of Soviet Socialist Republics agrees to the redemption by the Government of the Republic of China, with Chinese capital, of the Chinese Eastern Railway, as well as all appurtenant properties, and to the transfer to China of all shares and bonds of the said Railway.”
I said that from my knowledge of contracts of this kind that I was quite certain that the words, “with Chinese capital”, had been inserted with a purpose and that the Soviet Government would raise a great outcry were China to borrow money from another Government for the purpose of making this purchase. Mr. Rea agreed with me and said of course this put a stop to any proposition of this kind. He said that he could not understand why Sun Fo should be telegraphing him such a proposition.
I stated that I felt certain that such a proposition as this could only fail as the Russians would put all manner of obstacles in the way of the success of any proposition that would place the railway under the control of anyone except Russia. I called his attention to the fact that already the Russians had been spreading reports that the United States was engaged in imperialistic intrigue for the purpose of depriving Soviet Russia of her rights in the railway and that any indication that the plan which Mr. Sun Fo had cabled to Mr. Rea met with the approval of this Government would be a signal for further outcry of this kind.
Mr. Rea stated that he was planning to return to China in about a month. He stated that he felt that Mr. Lamont’s speech at Amsterdam had put a quietus on any possibility of a Chinese loan such as he had originally undertaken to obtain for Mr. Sun Fo and that he could not accomplish anything for them now. …
- For correspondence concerning the conflict over this railroad involving China and the Soviet Union, see pp. 186 ff.↩
- Foreign Relations, 1924, vol. i, p. 495.↩