493.11/834: Telegram
The Minister in China (Schurman) to the Secretary of State
[Received July 10—4:40 p.m.]
299. My telegram number 283, June 24, 5 p.m.35 The four Ministers are sending the following identic telegrams:
“At conference July 7th of Prime Minister, Minister of Finance, Chairman of the Financial Commission (Wellington Koo) and others with Ministers of Allied and Associated Powers on the subject of suspension of indemnity payments Prime Minister in the course of the conversations expressed intention of funding floating debt both external and internal on the security of 2½ percent customs surtax (see my 231, May 24, 1 p.m.36 with reference to identic telegram May 24th) and as a result of conversations July 8th and 11th the representatives of France, Great Britain, Japan and the United States considering that there are great difficulties in the way of obtaining the unanimous assent of the principal powers to the Chinese request for further suspension of Boxer indemnity payments and at the same time being desirous of assisting the Chinese Government in its present financial embarrassment and in view of their declared intention to proceed with disbandment troops make the following recommendation for consideration of their respective Governments, namely, that consortium banks should be authorized on application of Chinese Government to make advances not exceeding $15,000,000 spread over period of six months to be added to floating debt and secured by above-mentioned surtax or otherwise as the consortium banking groups may determine subject to supervision and audit with foreign assistance of this expenditure as to the further condition that the Chinese Government definitely pledges itself forthwith and concurrently with the said advance to negotiate and conclude with the consortium the consolidation of the internal and external floating debt.
[Page 780]Provision for the disbandment of troops within a stated period and for the regulation of future borrowing should form a part of the arrangement.
Although matters are still unsettled in the South and troubles continue in several provinces there is undoubtedly a wide-spread feeling in favor of unification and the old Parliament with many of the Southern members is expected to meet next month in Peking.
But in any case if this preliminary advance of $2,500,000 a month for six months is not made, the representatives of the four Powers consider it doubtful if present provisional government can carry on or if any other government likely to be formed would be more successful. No reconstruction program can be put through without financial assistance from outside.”