893.51/6374

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

No. 3056

Sir: I have the honor to refer to my telegram No. 270 of May 7, 11 a.m.,65 referring to a meeting of the Executive Council of the Consortium held on May 6. There is attached hereto a copy of Mr. [Page 589]Lamont’s letter to the Embassy on this subject, with its enclosure. In discussing this matter with Mr. Lamont, he said he had very little to add except that Count Kano, the Japanese representative, read a memorandum66 which was surprisingly frank and came out with the statement that there will be an endeavor by banking and industrial interests in Japan to curb the militarists. The memorandum then referred to the Consortium and said the Japanese group would favor a continuance of the Consortium, with the elimination of the obstructive provisions. In the subsequent discussion, Mr. Lamont said that to leave the shell of the old Consortium retaining only the political provisions, when the very name of Consortium was obnoxious to China, seemed to him of doubtful wisdom. Later Count Kano said he agreed with this and considered that probably a fresh start would be more advisable. However he also added that the Japanese Government was on the verge of concluding a treaty with China which might have made the existing Consortium all right. Mr. Lamont said he pressed him somewhat on this vague statement and considered that Count Kano realized he had overstepped the mark and rapidly withdrew from the inference he had given concerning an early treaty between Japan and China. Count Kano then said that Ambassador Yoshida was very anxious to see Mr. Lamont, with the result that a meeting was arranged for that afternoon.

Mr. Lamont discussed the possibility of a new Association with Ambassador Yoshida and asked as regards this British suggestion what would be the attitude of the Japanese Government. At first Ambassador Yoshida said he felt his Government would interpose objections because they were very anxious for international cooperation as regards China, and particularly desirous that anything that had been accomplished should not be undone. Mr. Lamont said he could not believe the Japanese Government was more anxious for international cooperation than was the United States Government, and he specifically said to Ambassador Yoshida: Would you not from a political angle, since the Consortium is particularly obnoxious to China, feel it more advisable to wipe it out and start again? Ambassador Yoshida replied: Yes, I feel the Japanese Government would agree on the whole if the State Department approved such a new, loose-knit Association as was proposed. Mr. Lamont said he then very clearly expressed to Ambassador Yoshida the hope that, if his Government did interpose any statement in regard to the British suggestion, Japanese assent to the wiping-out of the present Consortium would not be given on condition that a new Association be formed [Page 590]since any such point of view of the Japanese Government would rapidly leak out and the Chinese would say this new Association is merely the old obnoxious Consortium under a new name. Yoshida replied he very clearly saw that point of view and would give expression of it to his Government.

In conclusion, Mr. Lamont stated that he was surprised at the frankness of the memorandum which Count Kano read before the Executive Council of the Consortium meeting in that he twice cracked the Japanese militarists and that Count Kano was agreeable that copies of this memorandum should later be distributed to members of the Executive Council. When Mr. Lamont receives a copy of this he agreed to furnish one to the Embassy.

Respectfully yours,

For the Ambassador:
Ray Atherton

Counselor of Embassy
[Enclosure]

Mr. Thomas W. Lamont to the Counselor of Embassy in the United Kingdom (Atherton)

Dear Mr. Atherton: Referring to my memorandum of May 5th, the substance of which I understand you have transmitted to Washington, I may add that the Executive Council of the Consortium held a meeting this morning at the offices of the Hongkong and Shanghai Banking Corporation, Sir Charles Addis in the Chair.

The programme alluded to in the latter part of my memorandum to the effect that pending discussion among our Governments as to the advisability of dissolving the Corporation, the three other groups would make no objection to the British group proceeding in the matter of the Canton–Meihsien Railway was followed through, namely, that the representatives of the three groups agreed to recommend to their respective groups the waiving of technicalities in regard to the matter of the Canton–Meihsien Railway.

After the adjournment of the Council, I read to the individual delegates present, Mr. St. Pierre, representing the French group, Count Kano the Japanese group, Sir Charles Addis the British group and myself the American group, my letter to Sir Charles Addis, of which I attach copy. This was purely for the purpose of gaining from these delegates an informal and personal expression as to how they would view the formation of a new Association in the event that the old Consortium were to be dissolved. I made it especially clear that this was a purely preliminary exploration; that if any political advantage were to be gained by the complete liquidation of the old [Page 591]Consortium it could be gained only by making a complete cut-off and that the actual formation of a new Association should rest in the background for the time being. All the delegates present concurred very cordially in the idea of an attempt for further cooperation and in my statement that however no action should be taken pending a decision as to the dissolution of the existing Consortium. I see no great difficulty however in the future organisation of some such body as I have roughly indicated. Sir Charles Addis will study the matter further and in due course of time will give me his further views. In principle he welcomes the idea strongly.

You may perhaps wish to forward this report to the Department by post at your convenience.

Sincerely yours,

Thomas W. Lamont
[Subenclosure]

Mr. Thomas W. Lamont to Sir Charles Addis

Dear Sir Charles: The suggestion which I made to you orally in our conversation yesterday, with Mr. Whigham present, was roughly to the following effect:

(a)
That following closely upon the dissolution of the China Consortium—assuming that such dissolution is inevitable in the not distant future—the four banking groups now making up the Consortium should consider the organisation of a loosely knit Association for the purpose of preserving, so far as possible, the existing principle of international cooperation;
(b)
While it would be unnecessary for such new Association to be bound too rigidly by a fixed constitution or by-laws, it would be important for our initial statement to make clear that the basis for the new organisation should be primarily the continuing value 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.
(c)
The procedure of the Association would be as frequent interchange of views among the groups as was feasible, covering the status and development of important matters in China with reference particularly to industrial and administrative matters;
(d)
Without binding any one member of the group to offer a participation in any concrete piece of business, nevertheless it should be understood that each group would endeavour, so far as it lay within its power, to offer participations to the other groups in any ad hoc proposition or financial operation that might come before the originating group. In the same way, each group would purpose within its means to accept such participations as might be offered to it in any piece of business from any one of the other groups;
(e)
For the purpose of facilitating the objects of the Association an executive council might be formed with the understanding that it [Page 592]should meet not less than once a year in the City of London at the call or request of any one of the groups;
(f)
To membership of this proposed Association, Belgium and Germany might be invited.

The foregoing is very simple, very rough, and indicates how loosely knit such an Association should be. To my mind the more loosely knit it is, consistent with its definite existence, the better. As I said to you yesterday, you and I being thoroughly convinced of the value of continued co-operation in far-Eastern matters, it may well be that starting afresh in the small way indicated, we might succeed over a period of time in really rebuilding something substantial yet unhampered by political considerations in China and by too many fixed conditions. In the case of America the existing group is almost completely debarred from offering securities under our present laws. The chances are that those laws will not change immediately. On the other hand, it is quite probable that the existing Managing Committee in America might well succeed in organising an offering group of first-class Houses that might be interested in future Chinese business, although not immediately.

I have transmitted through our Embassy here to Washington the gist of my suggestion to you for the purpose of their comment. Meanwhile I shall be glad to have your own valued views.

Sincerely yours,

Thomas W. Lamont
  1. Not printed.
  2. Not printed. A copy of this memorandum was sent to the Chief of the Division of Far Eastern Affairs by Mr. Malcolm D. Simpson on June 18. (893.51/6404)