893.51/6645: Telegram

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

640. Hansard text of parliamentary announcement made by the Chancellor of the Exchequer yesterday afternoon in answer to an arranged question is as follows:

“Various proposals have been made by the Chinese Government for obtaining a loan in this country. As stated in the reply given to the honorable member on 14th April last, if in present circumstances the Chinese Government found it possible to obtain a loan from British financial institution, any request for government approval would be sympathetically considered. His Majesty’s Government have no power themselves to grant or guarantee a loan without special legislation which in present circumstances they have not seen their way to introduce.”

In answer to extemporaneous questions Sir John Simon indicated that in reaching this decision British interests had been fully considered and also the terms of the League of Nations resolutions “have been kept very fully in mind.”

Asked whether he did not feel that “in view of all that has happened in the Far East the claim of China to assistance in the form of a loan is at least as great as that of Turkey”, the Chancellor of the Exchequer replied:

“The circumstances of each case of course have to be weighed and the circumstances of the present case are very grave and serious but there is the consideration which must not be overlooked that in the case of Turkey we were dealing with a loan to a country which is not engaged in hostilities.”

I understand that the decision embodied in the above statement was made by the Cabinet on Wednesday. An official of the British Treasury implied that the Cabinet had been impressed by the desirability of avoiding antagonizing Japan gravely unless Great Britain was in a position to defend its Far Eastern interests without jeopardizing those in Europe and in the Mediterranean.