893.51/6367: Telegram

The Ambassador in the United Kingdom (Bingham) to the Secretary of State

267. Mr. Thomas Lamont has given me the following memorandum for transmission to the Department of State: [Page 587]

“Referring to recent discussion and correspondence with Dr. Hornbeck as to Chinese Consortium, meeting of the Executive Council of the Consortium has been called here for Thursday morning next. Representatives of all four banking groups will be present. I have had preliminary discussion with Sir Charles Addis for the purpose of exploring possibility as suggested by Hornbeck of continuing in some form the existing cooperation with reference to Chinese matters. Addis views almost with ‘consternation’ the idea of complete abandonment of the cooperative idea. At the same time he is convinced that the Foreign Office here for the reasons with which we are familiar as set forth extensively in the British note feels that the Consortium must be dissolved. In fact Addis himself feels that in its present form it has outlived its usefulness. Leith-Ross of the Treasury has also been urging dissolution having taken due note of the political unpopularity of the Consortium during his recent stay in China; feeling also that with Chinese economy on the mend we should have every opportunity to take advantage of favorable opportunities. I think we must accept dissolution as inevitable.

To Addis I made this tentative suggestion, namely, that upon dissolution, the same general banking interests should form a loosely knit association, the premise for the organization of which should be primarily the continuing importance of cooperation in Far Eastern matters, so far as it could be attained by the business interests of the four countries concerned, with the general approval of their respective Governments. I suggested that no fixed constitution or bylaws should be at present devised for such a new association but that having stated the objects for which it would be formed (as indicated above) it should call for as frequent interchange of views among the four groups as possible and such form of actual cooperation as might seem feasible in the case of any ad hoc proposition or financial operation that might be presented. In other words a British group for example would be under no fixed obligation to offer participations in proffered business from China but would very likely wish to do so if circumstances permitted. The same principle would apply to the other memberships. In this manner the difficulty of being obliged to offer each time a participation to Japan, which fact is in part responsible for the present impasse, would be avoided. I pointed out that beginning afresh in a small way as indicated there might well be hope as time went on of building up something more substantial. We should avoid the difficulty of having, as in the Consortium, started on rather a formidable cut-and-dried basis, being then obliged gradually to abandon it. With the name Consortium eliminated, we could make this mild start afresh without arousing political enmity in China especially as we should avoid any important announcement of the matter.

This idea was new to Addis. Speaking for himself, in a purely personal sense, he welcomed it. He added the suggestion that both Belgian and German Groups should be included in the invitation for any new association.

Would the Department favor my exploring this further with Addis? The Department will realize that the proposed association would really be of the loosest possible character, simply something to add as a rallying point and something for possible future development along the lines of international cooperation.

[Page 588]

At the Thursday meeting Addis proposes that while we shall recognize the fact that the four respective Governments are discussing the question of dissolution among themselves the time is not ripe for us to undertake action. He will state that the British Group may be called upon to make certain advances in connection with the recent railway scheme of which we have heard. If before these advances become due for refunding into a longer operation the Consortium is dissolved, there is nothing more to be said. If on the other hand the Consortium is not formally dissolved at that time the British Group will do their best to comply with the terms of the Consortium agreement by offering to other groups sub-participations. I stated that on such a program although strictly the British Group might be compelled to offer participations even in preliminary advances, nevertheless on behalf of the American Group I was disposed to raise no objection to the informal procedure outlined. I am clear in my opinion on this point because I hope that some loosely knit association may be devised to take the place of the Consortium.

I shall value an expression from the Department as to its views on the foregoing points and shall appreciate having a transcript of this message or the substance thereof transmitted by post to my New York office.”