893.51/3027: Telegram
The Acting Secretary of State to the Minister in China (Crane)
310. Your 339, October 22nd, 5 p.m. communicated to the American Group which states that it has given the matter careful consideration and replies as follows:
“(1) Land Tax. The Chinese Government must have been misinformed. No proposal has been made for a loan on Land Tax. (2) It is by no means vital to the Consortium that Chinese Government should consent to transfer of the Pacific Development Corporation’s contract. To take that contract over as it stands without change is opposed to the principles of the Consortium which, as the Department is aware, adhere to the idea of specifying the purposes for which any new loan shall be devoted and providing some sort of reasonable supervision. We are not aware that the Chinese Government has any power, to cancel the Pacific Development Corporation’s contract, by reason of the fact that the Corporation has fulfilled its obligations up to date. As heretofore stated, the American Group and Consortium delegates are working on a comprehensive loan plan which for its success would depend in large measure on utilizing the Wine and Tobacco Tax as security. It might well be made clear in an informal way to the Peking Government that if steps are taken to make this security unavailable for future Consortium loans there is little hope of carrying out the early and favorable development for which the American Group is working.”