The Secretary of State to the Minister in China ( Johnson )

No. 216

Sir: The Department has received the Legation’s despatch No. 296, of June 26, 1930, reporting in regard to the question raised by the request of the Continental Illinois Bank and Trust Company, of Chicago, Illinois (successors to the Continental and Commercial Trust and Savings Bank) that the Department take certain action in connection with the threatened destruction of the security assigned by the Chinese Government to a loan of $5,500,000, made to that Government by the American concern, and enclosing the draft of a note55 which the Legation proposes be sent to the Minister for Foreign Affairs “for purposes of record”.

The Department suggests that in place of the last substantive paragraph of the draft of the note prepared by the Legation there be substituted the following:

“I have not failed to note the mandate of the National Government, dated January 17, 1930, which appeared in the Government Gazette [Page 603] No. 372, of January 18, 1930, stating that ‘On and from October 10, 1930, all likin charges as well as all taxes and imposts which are similar to likin throughout China shall be abolished uniformly’. In this connection it is assumed that the National Government will, in any program that may be adopted for the abolition of likin, undoubtedly give due consideration to the rights of the American company as set forth in the terms of its contract with the Chinese Government.

“In view of the fact that this claim is one of long standing, I have the honor earnestly to request that Your Excellency acquaint me with the measures which the Chinese Government has in view to settle it”.

With the alteration indicated above, the Department authorizes the Legation to send the proposed note to the Minister for Foreign Affairs.56

With regard to the general question of opening negotiations looking towards the settlement of outstanding obligations owed to American citizens by the Chinese Government, the Legation should be guided by the Department’s instruction No. 171 of July 7, 1930.

Very truly yours,

For the Secretary of State:
William R. Castle, Jr.
  1. Not printed.
  2. The Department, in its telegram No. 431, December 15, 1930, instructed the Minister in China to call the attention of the Chinese Foreign Office to the bank’s loan agreement terms, the bank objecting to abolition of likin prior to conclusion of an agreement satisfactory to the bank for other security (893.51 Con-Ob-Continental/4).