File No. 893.51/818.

[Untitled]

Dear Mr. Wilson: I have now received a further communication from the Foreign Office on the subject of the Chinese loan negotiations.

The reply of the Japanese Government to the invitation to enter the combination of banks of other countries did not appear to Sir Edward Grey to require an immediate answer, but he is inclined to agree that the term special rights and interests should be interpreted as meaning those rights and interests which arise out of treaties.

As regards the reply of the Russian Government, Sir Edward Grey understands that their acceptance of the invitation applies only to the temporary advances. It has been explained to the Russian Government why, in order to strengthen the hands of the de facto government in China against the forces of disorder, it was impossible to await the designation of the Russian group before sanctioning the advances, and it was added that for the same reasons it might be impolitic to await the settlement of the conditions of Russian participation before agreeing to any further advances.

It was further stated that His Majesty’s Government considered that the best way to settle all conditions was by discussion between the different groups in consultation with their respective Governments, but that the Foreign Office was prepared to discuss the conditions of the loan with the Russian Government, and that His Majesty’s Government approved the conditions agreed on at the meeting of the banking groups, and further that the proposed loan of £60,000,000 was regarded as being the sequel and complement of the advances and that it was also acknowledged that the attitude which Russia might adopt toward other future loans was not prejudiced by her participation in present advances.

I am [etc.]

James Bryce.