File No. 893.51/803.

The American Minister to the Secretary of State.

[Telegram.—Paraphrase.]

The advance loan has been agreed to upon the following among other conditions: that the banks have option to provide further advances for monthly requirements of the Chinese Government, which shall assure to the groups option of undertaking reorganization loan.

In note of March 9, Yuan agreed to these conditions, but on the 14th Tong signed a loan with a Belgian-Russian group for £1,000,000 at 97 and 5 per cent interest, with Kalgan Railway revenues as security and option on £10,000,000 loan.

Calhoun.