800.503193/14
The Minister in China ( Johnson ) to the Secretary of State
[Received August 25.]
Sir: I have the honor to refer to the Department’s telegram No. 218 of July 19, 7 p.m., with regard to the China Development Finance Corporation and the plan of Mr. Jean Monnet for inducing foreign [Page 404] financial investments in China, and in reply I have the honor to state that I have no information regarding the China Development Finance Corporation or the plan of Mr. Monnet for inducing foreign financial investments in China other than that conveyed in my despatches Nos. 2715 of May 9, 1934,83 2744 of May 26, 1934, 2742 of June 8, 1934, 2755 of June 4, 1934,84 and 2843 of July 13, 1934.
[Here follows review of the despatches cited.]
The above constitutes all of the information that I have received in regard to this effort of Mr. Monnet to assist the Chinese in organizing a syndicate of bankers for public financing in China. I have hesitated to show an active interest in this matter because I felt that it was not a matter in which I could give any assistance, and I felt certain that as it developed we would learn whether such a proposal as Mr. Monnet had in mind could or could not succeed.
I am at a loss to know how to explain the alleged statement of Mr. Suma that the understanding underlying the Consortium Agreement of 1920 will be violated by Mr. Monnet’s project. The preamble of that agreement states that the participants in the Consortium Agreement would “welcome the cooperation of Chinese capital”. It has always been my understanding that the Consortium Agreement was not hostile to the organization of a group of Chinese bankers. I have always been under the impression that the members of the Consortium were prepared to welcome the cooperation of a Chinese banking group in any financing undertaken by the Consortium; and I have assumed and do still assume that Mr. Monnet’s project is none other than that described by him to me, namely, a project for the organization of a group of Chinese bankers for the purpose of engaging in financing in China.
In view of the way in which this statement, accredited to Mr. Suma, came to the Counselor of the Legation at Nanking, namely, through an American newspaper man, it has not seemed to me wise to approach the Japanese directly in the matter for the purpose of obtaining an explanation of the meaning of such a statement, for it has not seemed to me to be the part of wisdom to evidence to the Japanese the interest in the plan of Mr. Monnet which would prompt such an action.
From the general tenor of Mr. Suma’s statements as reported to me by the Counselor of the Legation at Nanking and by Mr. Monnet himself, I suppose that Mr. Suma and other Japanese have from the beginning looked with suspicion upon Mr. T. V. Soong’s efforts, in the summer of 1933, to obtain foreign capital for use in China; and in view of the fact that Mr. T. V. Soong’s invitation to Mr. Monnet grew [Page 405] out of these efforts, Japanese suspicion in the first phase of this situation transferred itself to the activities of Mr. Monnet in Shanghai. I assume that Mr. Suma’s statement was based upon this suspicion and a belief that Mr. Monnet’s activities merely cloaked his real intention of preparing the way for some financial assistance to the Chinese from abroad which would exclude Japanese participation. Mr. Suma doubtless takes the point of view that under the Consortium Agreement of 1920 to which the Japanese are parties, financial assistance from sources included in that agreement but excluding the Japanese would violate the terms of the agreement. I do not know how else to explain Mr. Suma’s reported attitude.
The latest information which I have in regard to the China Development Finance Corporation covers its list of stockholders. This list of stockholders was given to me in confidence by Mr. Monnet for communication, in confidence, to Professor James Rogers. The list is appended upon a separate sheet enclosed with this despatch.85
The Corporation was formally inaugurated on July 4th, and it would appear that the Ministry of Finance has authorized the Corporation to increase the membership of its Board of Directors from eight to twelve persons. The fact that no public opposition to this act by the Japanese has developed would indicate that they are prepared to accept the Corporation as a Chinese corporation.
Respectfully yours,