The Secretary of State to the Minister in China ( Johnson )
893.51/5908: Telegram
197. Your 282, June 30, noon. While the Chinese Government is obligated by Article 9 of the Loan Agreement to allocate part of the customs revenues to the service of the loan, the Chinese Government has not yet carried out that obligation and therefore it is incorrect to say, as is said in the draft note, that customs revenues have been “pledged” and “hypothecated” for the service of the loan.
The Department suggests that, in this draft, the last sentence of the first paragraph be amended to read substantially as follows:
“These accumulated defaults now amount to nearly 2,800,000 pounds sterling, and in these circumstances the complete disregard by the Chinese Government of its obligation under the agreement of 1911 to have the service of this loan made a charge, as prescribed and provided in the agreement, upon customs revenue while progressively utilizing [Page 558] increments of that revenue for other purposes must necessarily create most deplorable impressions abroad”;
and in the second paragraph the word “hypothecated” be replaced by “obligated”.
If these suggested amendments are acceptable to your British colleague, you are authorized to join with him in submitting a memorandum thus phrased.10
- The suggested changes were incorporated in the joint memorandum dated August 10, 1934 (893.51/5927).↩