893.51/4041
The British Ambassador (Geddes) to the Secretary of State
Sir: I have the honour, on instructions from my Government, to inform you that they have recently had under consideration certain informal proposals, advanced by the representatives of the four groups in Peking, for a loan from the China Consortium to the Peking Government. The State Department have doubtless been fully informed by the American group of the substance of these proposals and of the attitude taken up by the various groups in regard to their adoption.
His Majesty’s Government have arrived at the conclusion that the moment appears to have arrived when an effort should be made in a practical way to convince the Chinese Government of the beneficent intentions of the Consortium policy. While the present proposals cannot be expected in any case to do much more than pave the way for future transactions, His Majesty’s Government consider that the reconciliation of the Chinese Government to the Consortium would, in itself, be a great step in advance. They have, accordingly, notified the Central Agency of the Consortium in London that they are prepared in principle to approve the further examination of the proposals submitted. In adopting this attitude His Majesty’s Government have in mind the following, amongst other, considerations:—
- (1).
- Although China is still far from unification, yet her internal position is somewhat better. There is now a government in power in Peking, which, though financially in desperate straits, appears to be well-intentioned and deserving of assistance. Since the flight of Sun Yat Sen from Canton, there is no longer a government in the south which sets itself up as the only government in China. To this extent the position may be said to have improved.
- (2).
- Since the January proposals were made and rejected, it has been decided to set up a special tariff conference under the terms of the Washington Treaty. This materially alters the position with regard to the unsecured foreign debts of China. It will be manifestly impossible to exclude this highly contentious subject from the agenda of the conference, unless it can be settled beforehand. There is therefore every advantage in arranging this question now by direct negotiation with the Chinese, and thereby avoiding the risk of a clash at the conference.
- (3).
- It is obviously desirable that the Consortium should commence active operations as soon as possible, since, the longer it remains inactive, the greater is the danger that the policy of cooperation for which it stands will, in the end, be wrecked.
Should the United States Government agree with the views of His Majesty’s Government in this respect, I am instructed to urge that the United States representative in Tokyo may be authorised to associate [Page 794] himself with His Britannic Majesty’s Ambassador in pressing the Japanese Government to authorise their group to proceed with the consideration of these proposals. It is understood that among the grounds which have up to the present led to the Japanese Government objecting to the examination of these proposals is the apprehension, which His Majesty’s Government regard as quite unfounded, lest their adoption should prejudice the prospect of obtaining satisfactory handling of the unsecured foreign loans, more particularly those made to the Chinese Ministry of Communications.
I have [etc.]