893.51/6127

Memorandum by the Chief of the Division of Far Eastern Affairs (Hornbeck) of a Conversation With Mr. Thomas W. Lamont, of New York

Mr. Lamont83 called me on the telephone. He said that he and his associates were contemplating sending a telegram to the representative of the American Group in China, Mr. Charles E. Bennett, instructing Mr. Bennett to talk to the Chinese setting forth the American Group’s view with regard to the proposed arrangement for the Hukuang bonds; and he felt that it would be desirable to tell Mr. Bennett that he might expect some action in support by the American Ambassador. He wanted to have our opinion before taking this step.

I said that I appreciated his having thus informed me of what he had in mind. I said that I had not yet had opportunity to report to the Secretary on our conversations of yesterday84 but that I had been talking the matter over with one of my immediate associates and there had come up a query with regard to possible and probable lines of procedure: it had been my impression from what Mr. Lamont had said yesterday that the American and the British Groups are now actively conferring and that the American Group is in the act of expressing to the British Group its view regarding modifications that might advantageously be made in the proposed arrangement for the Hukuang bonds. Mr. Lamont said this was correct. I said that it then seemed to me that it would be desirable to arrive at the establishing of a common front, with the American and the British Groups in agreement upon an approach to be made to the Chinese Government. Mr. Lamont said that he felt that the best chance of producing such a common front would be for the American Group with the support of the American Government to inform the Chinese Government of the American Group’s view that the present proposal is not entirely satisfactory. There followed some discussion of the relative merits of these possible lines of procedure. In the course of this, Mr. Lamont stated that the British Group in the Consortium is standing aside and that the matter has taken the form of an effort merely by the representatives of the bondholders of the various nationalities interested in the Hukuang loan. It happens that these representatives are also among the principal signatories of the Consortium Agreement,85 but the business of the Hukuang bondholders [Page 584] and the business of the Consortium are separate matters. Mr. Lamont felt very strongly that it would be to the advantage of the American interest involved for the representatives of the American bondholders at this time to speak, with governmental support, to the Chinese on behalf of the American interest. I inquired how urgent the matter should be considered. Mr. Lamont replied that a matter of 2 days or so of delay would do no harm. I said that I would see that the question was given consideration. Mr. Lamont inquired whether it would be helpful if he were to have someone in his office prepare an outline of the facts which need most to be considered. I said that I thought it would be exceedingly helpful. Mr. Lamont said that he would send me informally a memorandum showing what he had in mind. I thanked him, and the conversation there ended.

S[tanley] K. H[ornbeck]
  1. Of J. P. Morgan & Co., representing the American Group of the China Consortium.
  2. Memorandum of conversations not printed.
  3. Signed at New York, October 15, 1920, by British, French, Japanese, and American banking groups, Foreign Relations, 1920, vol. i, p. 576; for minutes of conferences, October 11–15, see ibid., pp. 581589.