893.51 Con. Ob. Continental/151: Telegram
The Secretary of State to the Ambassador in China (Johnson)
223. 1. Under date September 3 the Foreign Bondholders Protective Council, in continuation of discussions with the Chinese Ministry of Finance in regard to the so-called Chicago Bank Loan, cabled the Minister of Finance stating that the Council had reluctantly come to the point where it might consider some proper solution other than immediate payment and offering certain suggestions as a basis for settlement. Under date September 8 the Minister of Finance cabled a reply which the Council characterizes as “most disappointing”.
2. In its correspondence with the Ministry of Finance the Council has emphasized the special position of this loan and its view that the terms of settlement offered by the Chinese Government are inequitable if not actually discriminatory. The Council now informs the Department [Page 597] that it proposes to send a further telegram to the Minister of Finance urging that the Chinese Government give further study to the matter with a view to offering terms which would represent more adequate consideration of the interests and rights of American note-holders. The Council has requested that the Department support its further communication to the Chinese Minister of Finance.
3. Please telegraph Peck or Gauss (depending on whether Kung is at Nanking or at Shanghai) to seek an early interview with the Minister of Finance and to express to him orally, as under instruction from the Department, the earnest hope of the American Government that the Chinese Government will see its way clear to giving careful and sympathetic consideration to the general intent of the Council’s further cable, when received, to the end that the Chinese Government and the Foreign Bondholders Protective Council may be able to reach a mutually satisfactory agreement appropriately considerate of the rights and interests of the American note-holders as well as of the interests of the Chinese Government. Peck or Gauss should avoid supporting any specific suggested terms of settlement. Peck or Gauss might take occasion to express the gratification of the Department that the Chinese Government considers improvement of its credit to be an important phase of its program of reconstruction and that that Government is making substantial efforts toward effecting settlement of its debts in arrears.
4. Inform Department immediately by telegraph when approach has been made to Kung.