File No. 893.51/288.]
[Inclosure.—Extract.]
Notes on the course of the loan negotiations
now pending at Peking.
The Department of State learned last spring from the Chinese
Minister in Washington and from the American Legation at Peking
that China had decided to adopt a uniform currency for the whole
Empire in fulfillment of pledges given to the United States in
the treaty of 1903. The Chinese Minister informed the Department
that he was preparing a memorial upon the subject, and on June
14, 1910, he called at the Department to talk the matter over.
The Assistant Secretary of State handed the Minister an
aide-mémoire expressing the pleasure of the Department in
learning that China was about to undertake this important reform
and suggested that to reassure the powers interested it would be
well to employ a foreign monetary expert to assist in
formulating the plans, but distinctly disclaimed any desire to
force an American adviser upon China. This was two months before
the American Government learned that a loan was in contemplation
by China for purposes of currency reform. The loan was solicited
by China, whose request that American bankers be asked
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to make it in the amount
of 50,000,000 taels was communicated to the Department of State
on August 17, 1910, by the American Minister at Peking, who at
the same time reported that his excellency Na-t’ung, by
direction of the Prince-Regent, had informed him that China
proposed to take immediate steps for currency reform, make a
large national loan, and engage a financial adviser who should
be an American selected by the Chinese Ministry of Finance. On
September 3 the Minister again called upon his excellency
Na-t’ung with regard to the proposed loan of 20,000,000 taels
for Manchuria, and was told by Na-t’ung that a loan for that
amount for a bank and colonization purposes had been proposed
and was likely to be sanctioned, and would be negotiated with
the American group, who, however, would be asked to admit to
participation the capital of other nations, notably British and
German. On October 2, 1910, the Chinese Government, through the
American Minister, requested that if American bankers were
willing to make the loan they increase the amount from
50,000,000 taels to $50,000,000, in order to include the above
proposed loan of 20,000,000 taels for Manchuria. The Chinese
Government again voluntarily promised that if the loan were made
in the United States an American would be appointed as financial
adviser to assist in the currency reform. The American bankers
agreed to undertake the business of floating the loan for
50,000,000 taels, and subsequently agreed to increase it to
$50,000,000, so as to include the desired 20,000,000 taels for
Manchurian development.
Before the preliminary agreement for the loan was signed the
American bankers, through the Department of State, informed the
Chinese Government that their representative was authorized to
sign “with the full understanding that the group must have an
absolutely free hand in marketing the bonds and in associating
with it such European interests in the final agreement as it
might desire.” To this Duke Tse replied that “the group might
have as many associates as they pleased, but that he would sign
the final agreement with Americans only and expect them to hold
the majority of the bonds.” The Chinese Government could hardly
have been surprised, therefore, had it found bankers of other
nations participating in the loan as reported in the
memorandum,1
but as a matter of fact no capitalists of other nationality than
American are participating; the agreement to which the
memorandum evidently refers2 expressly
provides for China’s consent to such participation, and the
American Government is not without hope that this consent will
be given. In the negotiations to secure for American financiers
participation in the Hukuang loan, and in the proposals for the
neutralization of the Manchurian railways, the aim of American
policy has been to secure a sympathetic and practical
cooperation of the great powers in maintaining the political
integrity of China by making it to the interest of each to
support such a policy. Where the nations invest their capital,
there they are intent on preserving peace and promoting the
development of natural resources and the prosperity of the
people.
For this reason the American Government has looked with favor
upon the desire of the American bankers to obtain China’s
consent to a participation by the capitalists of other nations
in the proposed loan for currency reform. Moreover, the success
of this reform will depend in a large measure upon the
sympathetic co-operation of the great powers. With any number of
these powers hostile or indifferent to the proposed reform it is
doubtful that China can accomplish it.
What the American Government has to suggest, therefore, is that
China shall cooperate with it in its efforts to interest the
other powers in the success of this needed reform. The
importance of this reform, however, in the view of the American
Government, is secondary to that of fiscal reform.
To carry out the numerous reforms that China has undertaken it is
necessary to secure a great increase of revenue, and with this
end in view the American Government has steadily supported China
in its desire to secure a revision of the tariff; but in its
earnest endeavors, especially in the past two years, to secure
the consent of other interested powers to a revision of the
Chinese tariff this Government found that such other powers were
inclined to make their consent to the discussion of such a
revision contingent upon the prior inauguration by China of
certain other reforms pledged by treaty, of which the currency
reform was the chief.
The active interest of the United States, therefore, in the
recent request of the Chinese Government for its assistance in
securing funds for currency reform was inspired not so much by
the importance, though great, of the proposed
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reform in itself as by the fact that
such reform was a step to the greater end. It is obvious that
China cannot reach the ultimate goal of tariff revision without
the concurrence of the treaty powers, and it is with regret that
the American Government notes that China seems disposed to
oppose the only practicable measures which have been proposed to
secure that sympathetic cooperation of the powers which will
give security to China and promote the ends which it has in
view.
Note.—On February 11, 1911, the
American Minister notified the Department of State of the
willingness of the Chinese Government to have quadruple
signatories, and a financial adviser; the adviser to be an
American if unanimous consent was given, otherwise to be of
neutral nationality, Dutch preferred. (File No. 893.51/299.)
The following note verbale was then directed to the
interested powers.
