893.51/6818: Telegram
The Ambassador in the United Kingdom (Kennedy) to the Secretary of State
[Received February 24—3:44 p.m.]
268. With reference to the information contained in the third paragraph of my 259, February 23, 2 p.m.,96 the British Treasury states that legislation will be required to empower the Government to give [Page 649] an indemnity against loss to the Hong Kong-Shanghai Banking Corporation and the Chartered Bank of India which will advance the necessary funds. During the next few days the rate of interest for this advance will be determined with these two banks and the Chinese monetary authorities are being consulted as to whether the Chinese banks are prepared to advance a similar sum. The arrangement will be terminable after the period of a year. It is expected that a controlling body will be organized to supervise the exchange transactions, composed of Chinese representatives, general representatives of the two British Far Eastern banks and of the British monetary authorities; presumably Rogers97 will be a participant. It is hoped that a public announcement can be issued within a week and endeavors are being made to persuade the French to announce at the same time that they are considering making a suitable, though not necessarily similar, contribution to China.
Casual inquiry regarding the customs loans elicited the information that strong pressure is continuing to be exerted on the Chinese Government “to make an offer that is reasonable and appropriate to their circumstances”. The British authorities seem bent on getting the Chinese to implement the Anglo-Japanese customs understanding but it also seems likely that the British do not consider that a great distinction exists between the customs and other Chinese loans; what they want is the servicing of sterling obligations.