893.811/313
The Minister in China ( Reinsch ) to the Acting Secretary of State
[Received February 15, 1919.]
Sir: As of possible interest to the Department, I have the honor to enclose copies of my letters to the American International Corporation and to Mr. Ripley, Chief Engineer of the Grand Canal Improvement Board, both dated December 11th,48 dealing with the present status of the Grand Canal Conservancy Project. There is enclosed also a copy of a letter from Mr. Ripley to the Director-General of the Board,48 setting forth the present financial position of the preliminary survey.
Briefly summarized, the position is that due chiefly to the unprecedented rise in exchange, but also to delays and to extraordinary overhead expenses, it now appears that it will be impossible to complete the preliminary survey as originally planned without exceeding the available funds, and that therefore, unless a further loan is made, it will be necessary considerably to reduce the amount of field work planned and which the Chief Engineer still considers to be essential to a proper study of the problem presented. Mr. Ripley has discussed the position technically in detail in a letter addressed to Mr. Hsiung Hsi-Ling, the Director-General of the Board. A copy of this letter was forwarded to the American International Corporation, but as it is of a purely technical nature, no copy is being transmitted to the Department. Mr. Ripley’s conclusion is that a further advance of Mexican $200,000.00 is urgently required if the survey is to be properly completed, and, acting on his recommendation, Mr. Hsiung has now made formal application to the American International [Page 622] Corporation through its resident representative here for a supplementary loan in this amount.
Inasmuch as this application is based on the urgent recommendation of the chief technical adviser to the Board, it would seem almost superfluous for the Legation to add its endorsement thereto. Nevertheless, as Mr. Hsiung has specifically requested the Legation’s support of his application, I venture to suggest that the Department urge on the American International Corporation the necessity for compliance therewith.
With reference to the correspondence enclosed, I desire to invite the Department’s attention especially to the prime necessity of the American International Corporation proceeding to construction work at the earliest possible moment. Unfortunately there appears to be the impression in Chinese circles that American capitalists are prone to seek concessions simply with the object of acquiring valuable options, and with no intention of the actual development thereof. It cannot be too strongly impressed on the American International Corporation that it is essential to future success in this country that some work be undertaken as soon as possible; preferably, this should be on the Grand Canal, but if that is impracticable, construction work under one of its railway options would be equally satisfactory.
Without going into technical details, it may be said that Mr. Ripley considers it to be feasible to undertake at once work on a part of the northern section of the Canal in the neighborhood of Ma Chang, which, in addition to being an integral part of the Canal Conservancy, would be beneficial to a conservancy scheme for the Chihli river system which is now engaging the attention of the Chinese Government. To the end that this work may be undertaken without delay, Mr. Ripley has proposed to the Board that an application be made for a further advance of $500,000.00, and I understand that the Board has approved this suggestion and has made an application in this sense to the American International Corporation. It appears that Mr. Ripley has not yet sufficiently elaborate data to undertake a detailed and accurate estimate of the cost of the work, and that therefore the sum of $500,000.00 represents an approximation only.
It is suggested that the propriety of undertaking this work without awaiting formal parliamentary ratification of the contract be urged on the American International Corporation. For obvious reasons it would not be politic to seek a ratification of the Corporation’s contracts from the parliament now meeting in Peking. On the other hand, to await the solution of China’s domestic difficulties, the possible revision of the constitution, and a subsequent election of a new parliament which would be competent to give the desired [Page 623] ratification, would postpone for months the possibility of commencing work. Under the circumstances it would appear that the proposal now made to negotiate an advance against the contract, offers the best way out of the difficulty, and for the reasons already stated I trust the Department will lend its full support to this proposal.
I have [etc.]