893.51 Contractual Obligations/18a: Telegram

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

3. 1. From a study of the Minister’s despatch of November 182 and your telegram No. 997, November 21, 11 a.m.,3 it appears to the Department that it is the desire of the Chinese Government, before entering into the discussion of the amounts to be applied to individual accounts, to obtain the consent of the creditor nations to an agreed-upon schedule of payments in settlement of China’s “duly contracted obligations in arrears”, the payments to be made exclusively from the customs, railway and salt revenues, to terminate in 30 years, and to be applied to all of China’s outstanding contractual obligations.

2. The Department is at present engaged in classifying and listing all American claims against China of which it has record, to supplement the survey of outstanding claims transmitted with its instruction No. 1467 of February 3, 1930.4 It is preparing also a list of obligations of a contractual nature, as requested in the Legation’s telegram under reference. This work may take several weeks. Department would hesitate to make an estimate, for presentation to the Chinese Government, of the total amount of contractual obligations of record in the Department due American creditors until the latter have been given an opportunity to submit statements of the present amounts of their respective claims. Department desires, in this relation, to learn whether the Minister believes that it would be premature under present circumstances for the Department to request such statements from American organizations and individuals interested. Department has given in confidence to J. P. Morgan and Company and to the Continental Illinois Bank and Trust Company the text of the Chinese Government’s memorandum but has not invited comments thereon.

3. Department does not see how it could give its consent to a proposal that annual payments be limited to sums to be derived from limited sources of revenue unless it were first given satisfactory evidence that the Chinese Government intended to give under that plan just and non-discriminatory consideration to the aggregate amount of the obligations owed by it to American creditors.

4. Therefore, if the Minister believes that a communication should be addressed to the Chinese Government in reference to the proposal [Page 1035] made to him and certain of his colleagues on November 15,5 the Department desires that he inform the Chinese Government that the American Government desires to facilitate in every appropriate and feasible manner the adjustment of the foreign obligations of the Chinese Government but that the American Government would not be in a position to give its assent to the present tentative plan until it had been informed more fully in regard to the treatment which the Chinese Government expects thereunder to accord to the total outstanding obligations owed to American citizens and organizations.

5. The Minister’s comments and suggestions would be welcomed, together with an indication of the attitude of other interested governments.

6. The Department desires also to have the Minister’s views as to whether the Chinese Government would be prepared, in addition to its proposal regarding contractual obligations, to propose an adjustment of pending American claims of all sorts, perhaps through the medium of a Sino-American claims commission.

  1. Not printed.
  2. Foreign Relations, 1930, vol. ii, p. 607.
  3. Ibid., p. 581.
  4. See telegram No. 997, November 21, 1930, from the Minister in China, ibid., p. 607.