893.51 Russian Issue/91
Memorandum by the Assistant Chief of the Division of Far Eastern Affairs (Mackay) of a Conversation With the Chinese Ambassador (Hu Shih)
Dr. Hu, upon invitation emanating from Dr. Hornbeck,53 called at the Department and, in conformity with prior arrangement, was received by Mr. Mackay.
Mr. Mackay outlined at considerable length developments relating to the unfortunate situation in which American holders of the Russian Series of the Chinese Government Reorganization Loan of 1913 have found themselves as the result of the refusal of the Chinese Government to honor the bonds indicated. Mr. Mackay also mentioned the numerous representations which over a period of many years have been made by the American Government to the Chinese Government—representations which thus far have been barren of satisfactory result; the fact that over three years ago a settlement was made with British holders of the bonds under reference; that no settlement has been made with or offered to American holders; and that the Department continues to be importuned by these holders for some action in protection of their interests. Mr. Mackay added that the most recent development of importance in the matter was the receipt by the American Ambassador to China of a note under date June 27, 193954 from Dr. H. H. Kung to the effect that, provided certain stipulations are complied with, the Chinese Ministry of Finance would be prepared, when circumstances permit, to use its good offices with a view to causing one or more Chinese banks to purchase a limited number of American held bonds of the issue under reference but not necessarily on the same terms as were accorded British holders. Mr. Mackay remarked that this statement had not been favorably received by certain representatives of the concerned American bondholders, some of whom, although frankly stating their sincere sympathy with China in its present difficulties, nevertheless felt that they were being discriminated against and treated unfairly by the Chinese Government. Mr. Mackay then handed to Dr. Hu a copy of a letter under date August 26 received by the Department from Mr. John J. McManus,55 in which letter request for such action was made. In conclusion, Mr. Mackay said that in view of the many factors in the situation he felt that Dr. Hu would wish to have the subject brought to his attention.
Dr. Hu said that he greatly appreciated being thus informed in regard to the matter; that he was not wholly unaware of the situation [Page 379] as he had received a number of protests from American holders of the bonds in question; that he could not in all fairness take exception to the critical attitude assumed by such American holders; that, in his opinion, Dr. Kung’s note of Jane 27 to Ambassador Johnson could not fail but create a “most unfortunate” impression; and that he would without delay send to his Government by air mail a statement of his views on the subject.
Upon taking leave Dr. Hu again expressed his sincere thanks for having the matter brought to his attention by the Department.
Note: In the course of his conversation Dr. Hu said that as he had not yet received a copy of the note of June 27 addressed to the American Ambassador by Dr. Kung he would appreciate the Department’s cooperation in providing him with a copy. Following reference to and approval by Dr. Hornbeck, this request was complied with.56
- Stanley K. Hornbeck, Adviser on Political Relations.↩
- See telegram No. 419, June 30, 10 a.m. from the Ambassador in China, p. 348.↩
- Not printed.↩
On January 24, 1940, the Chinese Ambassador wrote to the Assistant Chief of the Division of Far Eastern Affairs as follows:
↩“My Dear Mr. Mackay: Referring to our conversation of last summer on the subject of the so-called ‘Yellow Bonds’, I beg to inform you that, while my Government finds it impossible to take up the matter of these Bonds in the hands of American holders in these critical and difficult times, I am authorized to say that when the time comes for settlement of these Bonds, the American holders will receive the same treatment as the British holders received prior to the outbreak of the Sino-Japanese hostilities.” (893.51 Russian Issue/101)