800.503193/22
Memorandum by the Chief of the Division of Far Eastern Affairs (Hornbeck)
Mr. Monnet called and said that he had come to inform me of his experiences and developments in China in which he is interested, during the interval since his last call. He then gave me an account (similar to that which Mr. Lamont had given me yesterday—see memorandum of conversation with Mr. Lamont) of his efforts in China leading up to and resulting in the creation of the China Development Finance Corporation. He said that the Corporation was now a going concern and it had taken on its first piece of financing, the financing of the completion of the Shanghai–Hangchow–Ningpo Railway. In the course of the conversation it developed that the Hong Kong and Shanghai Banking Corporation is assisting in that financing.
Mr. Monnet went on to explain at length his theory of the way in which the C. D. F. C. may be able to be of use in developing business and industry in north China. Partly on his own initiative and partly in reply to questions which I asked, he said that he did not contemplate attempting to float issues of Chinese securities abroad until the Chinese had worked out some scheme for taking care of their outstanding public foreign debt. I endeavored repeatedly by indirect questioning to ascertain whether he had in contemplation the obtaining in the near future of capital from American sources. His answers were of a general character and to the effect that he thought only of bringing about, in connection with particular enterprises, a “sharing of risks”. He said that he believed that in all enterprises undertaken in China there should be Chinese participation and cooperative investment. Finally, I said that I wished to ask a direct and specific question, which Mr. Monnet might feel at liberty to decline to answer if he so wished: I would be interested to know whether he planned to ask for funds from the R. F. C. He said that he was perfectly willing to answer: that he did not. However, he went on to say, he had been talking with Mr. Peck93 and he had in mind the question of possible relations between the Export Bank and particular enterprises which might be undertaken in China. He said that he understood that there were a number of American firms which had in [Page 418] prospect possible sales of material and goods in China, which firms were casting about for means of financing the transactions. He made it perfectly evident to me that he had been talking of such matters with Mr. Peek. He said that if there was any particular enterprise which he undertook to present he would gladly let me know. He mentioned his association with the negotiation of the cotton and wheat credit last year,—and his mention of that gave me the opportunity to say that he knew and I knew that that transaction had caused a great deal of confusion and no end of unprofitable bother both to “us” and to “the Chinese”. He said that he well realized that such was the case. I then said that I did feel that if and when any projects of the character which he had been describing to me were “in the making”, this Department should be informed thereof at an early stage. He said that he quite agreed and that he personally would be only too glad to let us know insofar as he was concerned. I thanked him. He said that he would expect to call on me again in the not distant future. I said I would be glad to receive him at any time. And the conversation there ended.
- George N. Peek, president of the Export-Import Bank of Washington.↩