893.51 Con-Ob Continental/201
Memorandum of Conversation, by the Assistant Chief of the Division of Far Eastern Affairs (Mackay)
| Participants: | Mr. Francis White, President, Foreign Bondholders Protective Council, |
| Mr. Hornbeck77 | |
| Mr. Mackay |
Subject: Proposals of the Chinese Government with respect to the service of its obligations secured on customs and salt revenues.
Mr. White called at the Department and was received by Mr. Mackay. Mr. White offered comment in regard to the above subject and later covered the same ground with Mr. Hornbeck.
Mr. White prefaced his remarks by a rather lengthy dissertation on difficulties experienced by the Foreign Bondholders Protective Council as a result of the attitude displayed by the representatives of British bondholders with reference to outstanding obligations of various South American governments—a dissertation which Mr. White later termed as “neither here nor there”. Mr. White then said that he had been in communication with J. P. Morgan and Company with regard to the views of the Chinese Bondholders Committee at London on the question of the seniority of various Chinese loans and added that the British Committee was contending for payment in full of interest due on the British loans of 1898 and 1908. Mr. White said that the Foreign Bondholders Protective Council, by letter under date May 22 addressed to the British Committee had, in effect, stated that China’s [Page 835] difficulties in meeting its obligations arose not so much from a lack of funds as from a lack of foreign exchange; that a lien on the customs or salt revenues did not give any priority of rights on exchange; and that the Council was therefore in agreement with the Chinese Government that all loans should take a proportionate cut so that there might be no discrimination in the amount of exchange provided for each loan. Mr. White then asked whether the Department would suggest to the Chinese Embassy in Washington, perhaps orally and informally, that the text of any proposed announcements in regard to the future service of Chinese loans be made known to the Council and to J. P. Morgan and Company sufficiently in advance of publication to permit of comment and possible revision if revision should be necessary. Mr. White said that J. P. Morgan and Company had pointed out the possibility that the “Treasury bills” which the Chinese Government proposes to issue in amounts equal to the total unpaid service of outstanding loans might require registration with the Securities and Exchange Commission, a possibility which the Chinese authorities might not be aware of and that therefore it was highly desirable that the Council and J. P. Morgan and Company have an opportunity to study and to offer comment in regard to the specific terms of any Chinese Government proposal before publication thereof.
Mr. Hornbeck said that the subject under discussion would require careful consideration and suggested that Mr. White inform the Department in writing of his views and of his request of the Department in regard to the matter. Mr. White said that he would be pleased to do so and would suggest to J. P. Morgan and Company that they also write to the Department.
- Stanley K. Hornbeck, Adviser on Political Relations.↩