893.51 Manchuria/22
The Department of State to the French Embassy46
We find the question interesting and appreciate the French Government’s inquiry.
If Japanese banks and the “Manchoukuo” authorities decide to make such a loan, there is warrant for doubt whether the transaction need necessarily be inconsistent with the Consortium Agreement, provided the Japanese banking group offers to the other parties to the Agreement equal participation with itself in the proposed loan. If they do this and the other parties, offered participation, decline to participate, [Page 391] would not the Japanese group be free under the Agreement to proceed with the loan? On the other hand, as the Consortium Agreement relates to the whole territory of China, would the Japanese make any reference to or invocation of it?
The American Government would not look with favor upon participation by American banks in any loan to “Manchoukuo”.
It appears to us that up to such time as a Japanese group shall actually have concluded such a loan, an approach to the Japanese authorities on the subject would offer no practical advantage. If the Japanese conclude such a loan without having invited participation by the other parties to the Consortium Agreement, it would have to be considered whether it would be advisable to make to the Japanese Government a protest based on the Consortium Agreement. If, then, a protest were made, it would probably be met by the reply that “Manchoukuo” is not a part of China and therefore the provisions of the Consortium Agreement do not apply. At that point, the whole question of the status of “Manchoukuo” would be the real question at issue.
In view of the above, it seems to the American Government not advisable to act with regard to this matter at present. But if the Japanese approach the other powers on the subject or if they conclude a loan without approaching the other powers, then the question of a protest should be considered further. If and when a protest is made, it would be advantageous to have it made simultaneously by the French, the British and the American Governments.
It is suggested that the French Government may care to discuss the matter with the British Government.
The Department would appreciate being kept informed by the French Government of any further consideration, discussion or action that the French Government may decide upon or take in further pursuance of this question; and we would be glad to consider any further suggestions which the French Government may wish to offer in connection with the subject.