893.51/22611: Telegram
The Acting Secretary of State to the Ambassador in France (Wallace)10
8546. Your 649 of June 6, 11 p.m.11 and 679 of June 9, 4 p.m. You may reply in the following sense to the note of the French Government dated June 6:
“Adverting to the note from the Minister of Foreign Affairs handed to the American Ambassador on June 6th and with particular reference to the fourth paragraph thereof, it would seem that there was a possible misconception on the part of the French Government as to the scope of the proposed consortium. The phrase ‘independent financial operations’ and the context would seem to indicate that, in the mind of the Minister of Foreign Affairs, all [Page 448] independent financial operations in China were to be included within the scope of the consortium, whereas the agreement adopted provides, and the understanding of the United States Government is, that the consortium is to deal only with those loan projects which are to bear in effect the guarantee of the Chinese Government and which, at the same time, involve a public issue. It does not contemplate the entire elimination of industrial activities of private persons or of financial or industrial corporations, nor would it be the desire of the United States Government to do so. Consequently, the diplomatic support to be afforded to the French Group as a member of the consortium would simply be support relating to Chinese Government loan contracts coming specifically within scope of the agreement as stated in article 2, namely: ‘loan agreements which involve the issue for subscription by the public of loans to the Chinese Government or to Chinese Government departments or to provinces of China or to companies having Chinese Government or Chinese Provincial Government guarantees.’ This would still leave a very great field for financial activity open to individual and corporate initiative on the part of firms which are not members of any of the financial groups.
The Government of the United States feels that the Governments of each of the four participating groups should give their complete support to their respective national groups members of the consortium in all operations undertaken pursuant to the resolutions and agreements entered into by the bankers at Paris on the 11th and 12th of May, 1919, respectively.
It is sincerely hoped that the Government of France may come to an early conclusion so that the four Governments may be able to reach an agreement on or before the 18th instant, on which date the old consortium agreement expires. If the French Government and the other Governments concerned can so determine, a meeting of the representatives of the four banking groups now at Paris might be held on the 18th of June for organization.”
Personal. You are requested to take the French note under acknowledgment and the recent correspondence based upon it, and to go over the matter very carefully with Messrs. Lamont and Marshall and to take the note above transmitted in person to the Foreign Office and converse with M. Pichon on the subject. Department feels that he does not quite understand the entire proposition and that if he did understand it that there would be little or no objection on his part to the proposal as at present made, which would be infinitely preferable to crowding the issue at the present time and adopting a new formula which might be open to disagreement or to exception on the part of the other Governments, and which the Department feels would not materially clarify the issue.
It is felt that a careful oral explanation of the whole matter on your part, supplemented by the urgent request that the matter be agreed to so that an organization meeting can be held on the 18th, would be most helpful.
[Page 449]If the note transmitted above is not entirely expressive of the situation as seen by yourself, Lamont and Marshall, you are at liberty to change it in your discretion.
Repeat to the Embassy at London together with your 649 and 679 for its information and for discussion with the British Foreign Office in connection with London Embassy’s 2228 of June 7, 3 p.m.12
Also hand copies to Mission and keep Mr. Lansing advised. As soon as answer of French Government is received please cable London and advise Mr. Lansing. We will ask Mr. Lansing to assume control of the situation there as the time intervening will not permit handling the matter from here.
Also keep Department advised of all developments. American Group will meet in New York on Friday the 13th to discuss recent developments.