File No. 893.51/2176
Certain American Bankers to the Secretary of State
Sir: We have been giving very earnest consideration to the suggestion you made in Washington respecting a loan to China, and wish in the first place to assure you of our disposition to be of service in the matter, and to help in finding some way in which the wishes of the administration can be carried out.
In the course of our discussion the following points have seemed to us to be fundamental:
First. An arrangement of this sort which contemplates transactions spread over a considerable period of time, in our opinion should be made on the broadest basis in order to give the best protection to our investors, and with the right foundation established confidence would follow and anxiety and jealousy disappear. At the conference held in Washington recently there was mentioned as a course perhaps advisable that Americans and Japanese cooperate in a loan to China. We are disposed to believe that it would be better if such international cooperation were to be made broader. We suggest therefore, that this can best be accomplished if a four-power group be constituted consisting of financial members to be recognized by the respective Governments of Great Britain, France, Japan and the [Page 173] United States; our Government to recognize as their member of such group the American banks or firms which may become associated for this purpose, and which we should hope to have representative of the whole country. Although under the present circumstances it would be expected that Japan and the United States should carry England and France, such carrying should not diminish the vitality of their memberships in the four-power group.
One of the conditions of membership in such a four-power group should be that there should be a relinquishment by the members of the group either to China or to the group of any options to make loans which they now hold, and all loans to China by any of them should be considered as four-power group business. Through cooperation of England, France, Japan and the United States much can be accomplished for the maintenance of Chinese sovereignty and the preservation of the “open door”; and furthermore, such cooperation might greatly facilitate the full development of the large revenue sources, from only a very few of which China at present realizes a satisfactory income.
It would seem to be necessary if now and after the war we are successfully to carry out the responsibilities imposed upon us by our new international position, that our Government should be prepared in principle to recognize the change in our international relations, both diplomatic and commercial, brought about by the war.
Second. We have considerable doubt whether under the present circumstances the people of the United States could be induced to buy the debt of any foreign country on any terms. We feel quite certain that no loan could be sold unless the Government would be willing at the time of issue to make it clear to the public that the loan is made at the suggestion of the Government; with such an announcement we think it possible that a reasonable amount of Chinese loan could be placed in this country.
If these two fundamental conditions are agreed to by our Government we hold ourselves at your disposal to go further into the details of any proposed loan, and will cooperate with you most earnestly and sympathetically.
Yours very truly,
Kuhn, Loeb & Co.
The National City Bank of New York,
By
First National Bank, New York,
By
Chase National Bank,
By
Continental & Commercial Trust
& Savings Bank, Chicago,
By
Lee, Higginson & Co.
Guaranty Trust Co. of New York,
By