893.51/2788: Telegram
The Secretary of State to the Chargé in China (Tenney)
90. Following from Morgan and Company for American Group to Lamont:
“25. April 21st. Meeting American Group held today. Regret that unanimous opinion very strong that impracticable to attempt to proceed with the three power consortium on two grounds: (1) from point of view of administration and supervision of expenditures, as all feel that Japanese cooperation or acquiescence in these matters essential to success; (2) from point of view of marketability, feel would hardly be justified in proceeding to issue securities in this market on a three power consortium basis. Greatly regret that not possible, therefore, to comply with your earnest request that we place in your hands this alternative to present to the Japanese, whereby their decision could [be] expedited. Personally do not see, however, that situation has been changed since our original conversations with State Department, when we advised them that if the State Department desired to invite the other three powers to suggest to their respective groups the advisability of reforming the four power consortium, we as head of the American Group would be prepared to assist to the full extent of our capacity, and even feel that conditions have so changed that such a point of view is more important now than before.
Would it not be possible for you, in order to bring the Japanese to a decision, to tell them that if they do not come in before blank date the invitation to the Japanese Group to enter the consortium is cancelled and that thereafter it will remain with the other Groups [Page 534] to determine what course of action they will take to safeguard and develop their interests in China? Gather from your cables that you still believe Japanese Group, as distinct from the Government, is in favor of coöperating with other three groups and cannot but feel that a definite time limit will force them to appreciate the necessity of pushing the opinion of the Group with the Japanese Government as far as possible, particularly in view of present financial conditions in Japan, which we gather are uncomfortably extended.
Chinese Eastern Railway. The American Group feels that if and when the consortium is formed, this is properly a matter to be handled by it, but that prior to such time the managing committee of the Group cannot undertake any business which is not along the lines to which the American Group are committed as participants.
Wish to reiterate my great regret at this apparent lack of support to you in these trying negotiations but have only come to these conclusions after most careful consideration. J. P. Morgan.”