File No. 893.51/1083.
The Acting Secretary of State to the Ambassador of Great Britain.1
Washington, October 4, 1912.
Excellency: I have the honor to acknowledge the receipt of your excellency’s note No. 192 of the 28th ultimo, which concludes with an intimation that His Britannic Majesty’s Government hopes that the other Governments concerned in the international understanding with regard to the Chinese loans may early approve the reopening of negotiations by the representatives of the groups at Peking on the basis of the most recent proposals of the Chinese Government.
[Page 155]I receive your excellency’s communication as inviting a statement of the position of the Federal Government upon this particular point, but the extreme gravity of the questions involved, like the extensive context of this one phase thereof, makes me feel it my duty first to attempt some broader elucidation of the views of this Government upon the general subject and upon some of the other points set forth in your excellency’s note under acknowledgment.
The Government of the United States would be sorry to discover in the real position of the British Government any material divergence from the accordant fundamental views hitherto shared by both Governments with so happy effect, I believe, upon the common interest and the general course of events. The exchanges of views between first the four and later the six Governments, the painstaking negotiations with successive Chinese Governments, and the tireless efforts of the bankers of the six groups, have extended in one form or another over a period of three or four years. The result has been an agreement between the powers upon the broad principle of international cooperation and concerted action in favor of international loans to China upon thoroughly sound and helpful bases as best alike for China and the powers, the six Governments being in accord upon the principle of insistence upon adequate provisions for audit and control of expenditures which shall have the effect of protecting China from improvident extravagances, of maintaining China’s credit, and of assuring the value of bonds to be issued.
Attaching the most serious importance to what has thus been accomplished, and recognizing not only the good results already obtained but looking also to the great potentialities of future benefit from a continuance of this policy, the Government of the United States could hardly conceive for a moment of considering the question of abandoning so momentous and far reaching a policy merely because confronted from time to time with some temporary embarrassment or untoward incident.
China’s rejection of the proposals of the groups, so far from being regarded as definitive, was unhesitatingly assumed by this Government to be nothing more than a not unnatural occurrence in the give and take of a negotiation whose very importance and intricacy would suggest most thorough deliberation and long duration. The rejection by the groups of China’s counterproposal was quite similarly regarded by the Government of the United States.
As for the recent London loan, the Government of the United States appreciates fully the difficulties met by the British Government in seeking to deter its nationals from, making loans to China inconsistent with the international understanding thereon and is very sensible of the great efforts made to that end. The information that has reached the Department has seemed to indicate that, doubtless due to the attitude of your excellency’s Government, the success of that loan has been so slight as to make it at least as likely to operate in the future as a deterrent to future efforts to break down the principles which the powers have deemed it wise to favor in regard to Chinese loans as it would be to operate as an opening wedge for the breaking up of the international agreement. Moreover, while regretting, as does your excellency’s Government, the inconvenience caused by that incident, the Government of the United States has felt every confidence [Page 156] in the ability of your excellency’s Government ultimately to minimize any bad effect upon the fixity of the principles laid down, and this Government still hopes that, through bringing about a broader participation of divers British interests or by some other expedient which may suggest itself, your excellency’s Government may still find itself as fully able to deal with this situation as have the other Governments of the six-power group been able to deal with corresponding situations which have arisen in this country and elsewhere.
Indeed, the Government of the United States sees in the present situation no reason whatever why the international understanding should not continue quite as strong and effective as hitherto. Holding these views, this Government would be surprised to interpret as reflecting more than the temporary anxiety of the British group any suggestion that instant action is necessary to save the situation, that only one more effort could be made, or that there is any valid reason for an abandonment of the principles to which the six Governments and the six groups have agreed to adhere.
To return to the suggestion that the bankers should resume negotiations upon the basis of the latest counterproposal of the Chinese Government, the Government of the United States has no reason to doubt that the American group have been and still are quite ready to take any opportune occasion to resume discussions upon any reasonable basis. Inasmuch as the Chinese counterproposal appears to go rather far in the direction of admitting in principle the ideas of supervision and control of expenditures, it may be possible that something like that counterproposal could be taken as the point of departure in a resumption of discussions between the Chinese Government and the representatives of the bankers, especially if the Chinese Government would offer some satisfactory provision, corresponding to the option previously asked, which would assure absolute protection of the security previously given, or by other means give sufficient guaranty of the stability of the bonds which the six-power group might be asked to take from China.
I am unable to perceive that the size of a loan which might be proposed should affect the principles for which the powers contend and I am impressed with the desirability for the sake of the credit of China of establishing a precedent for conservative and safe provisions. The Department’s advices indicate no change in the general situation in China of a character to affect its view of the importance of principles which are a part of the international understanding: nor is the Department prepared to believe that the ability of China just now to borrow a small amount on its own terms can, in view of the large financial needs of the future, place it in a position long to resist proposals involving principles upon which the six powers deem it their duty to insist.
Believing that your excellency’s Government would be the first to deplore any rash or unnecessary abandonment of a great and useful policy, I hope that your excellency will be good enough to impress upon His Britannic Majesty’s Government the great importance attached by the Government of the United States to the existing common accord.
In regard to the specific question raised by your excellency’s note, I am happy to assure you that the Government of the United States [Page 157] will be glad to intimate to the American group the desirability of their holding themselves in readiness to resume at any opportune time discussions upon any basis generally consistent with the principles of the international accord and tending toward ultimate broad financial reform in China.
In making this response I trust it is unnecessary to say that the Government of the United States must rely upon your excellency’s Government to make sure that no temporary exigency of the British group shall be allowed to jeopardize negotiations in which so many powers are so greatly interested and for the success of which surely the most patient efforts and much time would be well spent, while the lack of these could so easily make comparatively futile the work of so many years.
I have [etc.],
- Copies mailed to Paris, Berlin, St. Petersburg, and, for their information, to Tokyo and Peking.↩