893.51/5830: Telegram
The Minister in China (Johnson) to the Acting Secretary of State
[Received November 22—9 a.m.]
867. Department’s 297, August 23, 1 p.m., Hukuang loan.
1. National Government Gazette November 6 quotes text of regulations governing customs duty Treasury notes of 1933 promulgated November 4 which provides that this issue in an amount of $100,000,000 are secured by the “increased customs revenue”. Interested banks have requested American and British Legations to file protest.
2. British Legation has submitted following draft for joint signature by American, British and French representatives:
[“]In their memorandum of the 28th of July last, to which no reply has as yet been received, the undersigned representatives of France, Great Britain and the United States of America had the honor to remind His Excellency, the Minister for Foreign Affairs, of the alarming proportions of the debt arising from the constant defaults in the service of the Hukuang Railways 5 percent sterling loan agreement of 1911, and to enquire what steps the Chinese Government proposed to take to implement its obligations under articles 8 and 9 of that agreement.
The attention [of] the undersigned representatives has now been drawn to the text of certain regulations governing customs duty Treasury notes of the year 1933 quoted in the National Government Gazette of November 6th last, which provide in article 6 that the Treasury notes of this issue, to an amount of $100,000,000, shall be secured on the receipts from the increased customs revenues. They feel constrained to point out that the continued hypothecation of customs revenues for the service of new internal issues, while no attempt is made to give effect to the terms of article 9 of the Loan Agreement of 1911 which provides that in the event of the abolition of the likin required to provide the service of the loan, an equivalent first charge will be laid upon increased customs revenues, is not only inflicting a great injustice on the bondholders of the loan but is causing doubt to be cast upon the pledged word of the Chinese Government.
The undersigned representatives have accordingly the honor to request once again that the Chinese Government devise measures as early as possible to implement the undertakings given in the above-quoted clauses of the loan agreement.”
3. The Legation requests Department’s authorization to join in the memorandum as drafted.