893.51/5738: Telegram

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

116. Department’s 37, February 3, 3 p.m.

As regards priority of lien Chinese might claim with some degree of justice that proceeds are considered in the same category as administrative expenses of the customs. This is indicated by statement of Secretary of French Legation to member of this Legation in conveying information about loan. He said that customs expected to repay loan out of customs’ budget although this is not understood to be part of loan agreement. If this is the case smallness of loan would not seem to threaten Boxer Indemnity lien.
Secretary of French Legation informed member of this Legation that prior to entering into agreement with Bank of Indo-China Chinese customs offered loan to others. He mentioned Hong Kong-Shanghai Bank and said he believed offer had also been made to National City Bank. Manager National City Bank here in reply to informal inquiry states he had no knowledge of agreement and has written to Shanghai for information. I have no information as to whether Bank of Indo-China offered share of loan to fellow members of consortium under paragraph 4 of consortium agreement October 15th, 1920.87
French Minister has never mentioned matter to me although we had long conversation yesterday evening about other matters. I shall comment further when I hear whether National City Bank was given an opportunity to bid.