File No. 893.51/1309.
The Secretary of State to the American Chargé d’Affaires.
Washington, February 27, 1913.
Sir: The present situation in Peking as reflected in the Legation’s telegram of February 21, 7 p.m., seems to the Department to call for a renewed expression of its views for your guidance.
Your previous instructions will have made clear to you that the Department has greatly deprecated the apparent introduction of political issues into the loan negotiations. Its sole aim has been, in pursuance of the uniform policy of this Government toward China, to assist the latter in procuring, without undue embarrassment, the funds required at this critical period for reorganization and rehabilitation. As you are well aware, experience has shown the wisdom of surrounding such loans to China with adequate safeguards of supervision, not only as a reasonable measure of protection for the interests of the lenders and of the ultimate bondholders but also as a necessary means of upholding China’s credit and avoiding the possible consequences of default in her financial obligations, which are already pressing. The Department has, however, consistently held that the Chinese Government must be left free to accept or decline a loan on the conditions proposed, and the American group of bankers interested in the loan negotiations have likewise held the same views.
The Legation was accordingly instructed on February 17 to approve the proposal then under consideration as to foreign advisers connected with the loan on the understanding that, as represented in the Legation’s telegram of the same date, the Chinese Government had already expressed its acceptance of the proposal and that the loan was of vital necessity to China. You should make it clear to your colleagues, as occasion may require, that this Government, while continuing to insist upon what it considers reasonable and general measures for the protection of the interests of all its nationals, including adequate guaranties for the lenders and efficient supervision of disbursements, is not prepared to join in any coercive steps designed to compel China’s acceptance either of the present loan or of any particular proposal as to advisers.
A careful review of the whole correspondence on this question leads the Department to believe that the difficulties in the way of the loan negotiations may not be as serious as some of the reports, taken by themselves, would seem to indicate. As a matter of fact, the points still at issue so far as the Governments are concerned seem to be reduced to the one question of the chief adviser to the salt gabelle, which lies between Great Britain and Germany alone and which those two Governments are making serious effort to solve. The suggestion of ulterior motives and deliberate efforts to impede the negotiations, referred to in certain reports, do not seem to be borne out by an impartial examination of the correspondence as a whole. On the contrary, the statement of the position of the Governments as contained in the inclosed memorandum from Paris1 seems eminently practical, candid, and convincing. Under the circumstances, therefore, while it [Page 167] is quite possible that the completion of these peculiarly intricate negotiations may yet require considerable time, the Department is convinced that the only consistent course just now open to this Government is to maintain the position it has so deliberately assumed and, while awaiting results, to make from time to time such opportune suggestions as may commend themselves or may be recommended by your Legation.
I am [etc.]
- See ante, inclosure in Mr. Herrick’s No. 273, February 14.↩