The Department of State to the Chinese Legation15

In reference to the question whether the proposal made by President Hoover for postponement for one year of payments on intergovernmental debts is applicable to debts owed by the Chinese Government to foreign governments,—

The proposal was prompted primarily by the view that the strain of payments on debt and reparations obligations which arose out of the World War had become during the present period of depression so burdensome that continuance of such payments was jeopardizing both the political and economic situation in Europe, particularly in Germany—which country seemed to be approaching the limit of its revenue raising capacity. The immediate object of the proposal was to afford relief from obligations which have arisen out of the War. It was not within the calculation or intent of the American Government that the proposal should extend beyond that realm of obligations, and the discussions which were held between representatives of the American Government and those of the other principal creditor governments, which discussions led to the acceptance in principle of the American proposal, were limited to debt and reparations payments of the character indicated above.

  1. Copy read and handed to the Chinese Chargé on July 16, 1931, by the Chief of the Division of Far Eastern Affairs.