893.51 Con-Ob American Group/40: Telegram
The Secretary of State to the Ambassador in China (Johnson)
77. Reference, your 147, April 2, 5 p.m.1 Discussion of Minister Kung’s proposal for settlement of Pacific Development Corporation Loan will be initiated by Mr. Lamont with Kung in London.
Meanwhile, Mr. Arthur Anderson of J. P. Morgan and Company has informed Department informally that majority of representatives of the American interests concerned, having conferred in New York, incline to the view that a satisfactory and reliable agreement formulated on the basis of a capital sum of $4,300,000 would be better than an unsatisfactory agreement of doubtful reliability based on a capital sum of $5,500,000. They and officers of the Foreign Bondholders Protective Council, informally consulted, feel that the agreement should approximate in terms the agreement made on the Chicago Bank Loan. Their contentions will be advanced by Mr. Lamont in due course, but they wished that the Department and the Ambassador to China be informed, in the hope that we will endeavor as may be appropriate to foster and support the idea of reasonable terms on the basis of a reasonable amount.
Department assumes that Bennett will be in position to keep you informed. If and as this subject arises in any conversations which you may have with Chinese officials or with Arthur Young,2 you should, without going into details as to terms or amount, urge that the Chinese [Page 673] Government should endeavor to make an equitable agreement rather than drive a hard bargain for settlement of this loan.