893.51/4263: Telegram

The Minister in China (Schurman) to the Secretary of State

116. My 106, April 13, 5 p.m.51 and your 61, April 13, 6 p.m., which crossed.

Group representatives had 4-hour conference April 17th with Minister of Finance. The Minister explained that the Government was in urgent need of funds for administrative and police expenses. He stated that the customs funds being all taken for foreign loans and certain domestic loan services and the salt (of which about $44,000,000 out of $86,000,000 is retained by the provinces) being overloaded with charges, the Government has no means of paying current expenses, not to mention unsecured foreign and domestic loans and debts. The Government therefore desired and intended to bring out a consolidation scheme to cover all foreign and domestic unsecured loans and debts except those of the Ministry of Communication[s] with the hope that the customs funds including the proposed 2½ percent increase would be sufficient to serve such a consolidation loan. The Minister therefore urged on the group representatives the desirability of inducing the special conference to agree to such use of the 2½ percent increase. With a [the] Government relieved of pressing needs he was confident a satisfactory consolidation scheme could be worked out. But to so relieve the Government during the period necessary to work out the scheme it was necessary it should have an assured income for expenses to have $3,000,000 per month for eight months beginning in May and he requested the four banks to make the Government advances on those lines to be repaid $5,000 per month beginning January 1924. He emphasized that he must be taken as talking to the four banks’ representatives and not to the representatives of the Consortium. He explained that while he personally had [Page 538] every trust and faith in the Consortium and recognized that it alone could be relied on to carry out such if agreed upon, the public and Parliament would strongly object to his “recognizing” the new Consortium. And he further requested that the meeting be kept secret or confidential.

Group representatives replied banks could act only as group representatives of Consortium and question of advancing was inextricably united with question of consolidation. They must have an undertaking that once having begun advances they would be entrusted with the working up (in collaboration with the Government) of a consolidation scheme the execution of which would also be entrusted to them. It was agreed to hold another meeting in a few days to hear from Minister Government’s preliminary consolidation scheme if any.

Schurman
  1. Not printed.