861.77 Chinese Eastern (Loan) 1932/5: Telegram
The Chargé in France (Armour) to the Secretary of State
[Received June 9—1:45 p.m.]
368. Reference last paragraph Embassy’s telegram 366, June 8, 5 p.m. Well-informed and reliable French and American banking authorities here express the opinion that the newly constituted state could not possibly secure any substantial financial aid from French bankers even if the Government were favorable which is not the case. It is pointed out that no reason political or otherwise is apparent why the French Government or French bankers should take such a serious risk. As concerns any possible public issue prevailing evident caution and hesitation of investors is emphasized even as concerns reasonably sound offers. As an instance a recent inconsequential issue although guaranteed by the French Government has found a very limited and narrow market here.
Massenet, director of the Franco-Asiatic Bank, has some personal wealth but the bank is weak (capital about 3 million francs) it is said. He has little or no influence in banking circles. He could not reasonably be expected to succeed in interesting or persuading bankers capable of furnishing any substantial capital to risk anything in the Far East under present circumstances. Bank’s chief business appears to be the liquidation and management of concerns declared in bankruptcy. It has tried for years unsuccessfully to persuade French Government to intervene with the Chinese and Soviet Governments for return of its confiscated interest in Chinese Eastern Railway which is said to be considerable. Suggestion made here that to secure this end Massenet might have promised financial aid and also that he might be engaged in securing contracts for French firms for railway material. In this connection an article appears in today’s Agence Economique stating that Massenet’s essential mission in the Extreme Orient concerns the protection of French interests in the railway in question. In this respect this paper refers to provision of Washington Conference of 1922 “which holds the Chinese Government [Page 72] responsible for the interests of the stock and bondholders of the Chinese Eastern Railway.”