(c) In exporting raw materials or manufactured articles and in importing raw materials, machinery, or the like special lines of goods when the special permit of the Government has been obtained the Ministry of Communications shall give the same terms for freight as in transporting Government property and shall fix a favorable exchange to encourage the company. When the Government wish to stimulate trade in any native products it shall notify this company of the varieties of goods and shall order the company to take measures to increase the import or export as a part of its obligation. Clause A presumably refers to imports of arms and ammunition and to export of cereals (now required by Japan in view of the rice famine there) and copper cash and possibly iron which this Government is seeking to make a nationalized industry. The paragraph last quoted is understood to refer principally to cotton and wool. Unless otherwise instructed I propose to address to the Foreign Office a statement that our Government trusts there is no intention on the part of the Chinese Government to confer any exclusive or monopolistic powers on this company in violation of treaty provisions and that it must claim for its nationals any special privileges which these regulations may be construed to confer. MACMURRAY File No. 893.51/1997 The Chargé in China (MacMurray) to the Secretary of State [Telegram] PEKING, September 6, 1918, 9 p. m. The protest of the banks reported in my August 17, 5 p. m., having elicited from the Minister of Finance only a statement that the regulations for gold notes were in pursuance of a plan of monetary reform and that there was no occasion for anxiety, interested legations on the 31st ultimo formally protested to the Chinese Government by identic notes of the same tenor as the protest of the banks. I am now reliably informed that the note of the Japanese Legation contained an additional passage stating that the Japanese Government further objected to the adoption of these regulations in disregard of assurances received from the Chinese Government that Baron Sakatani would be employed as financial adviser to assist in the reform of currency. It seems likely that the question of the rights of consortium in the matter will not become acute until October 14 on the expiration of their option under the currency loan agreement. It now seems advisable to reserve until that time any action under the authorization contained in your telegram of August 21, 3 p. m. MACMURRAY File No. 893.5034/26 The Secretary of State to the Chargé in China (MacMurray) [Telegram] WASHINGTON, September 7, 1918, 4 p. m. Your August 29, regarding Chinese trading company. posal to notify the Chinese Government formally that the American Government will claim for its nationals as a treaty right any special privileges granted to the company is approved. In expressing to the Chinese Government the hope that there is no intention on its part to confer any exclusive or monopolistic powers on the company in question you will say that the American Government would be greatly concerned to learn that the Chinese Government had in fact countenanced the organization of a company which seems to have for its purpose the creation of a monopolistic enterprise in contravention of treaty provisions. LANSING File No. 893.51/2029 The Chargé in China (MacMurray) to the Secretary of State No. 2228 [Extracts] PEKING, September 9, 1918. SIR: Referring to the despatch (No. 2197) of August 13, in which the Legation reported concerning the promulgation by the Chinese Government of regulations contemplating the issuance of gold currency notes based upon a credit of 80,000,000 yen to be extended by certain Japanese banking interests represented by the Bank of Chosen, I have the honor to report that this matter has been so jealously kept secret by those concerned in the transaction that it has thus far proved impossible to obtain any definite or exact information as to the nature of the scheme contemplated or as to such arrangements as are believed (in spite of the denial of the Acting Minister of Finance, Mr. Ts'ao Ju-lin) to have been made with the interested Japanese banking group through Mr. Nishihara. There is enclosed, however, a translation (as given in the Peking Leader of August 15 and 161) of the memorandum on gold currency with which the Acting Minister of Finance submitted for promulgation by the President the sets of regulations which were forwarded to the Department in my despatch cited above. By way of comment upon the proposal, there are also enclosed an editorial article in the Peking Leader of August 16,1 a clipping from the same newspaper (August 17)1 professing to quote the explanations offered from an official source, and a translation (as given in the Leader of August 17 and 18) of a criticism of the regulations by Liang Chiu-sui.1 It will be noted that in the memorandum on gold currency, submitted by the Acting Minister of Finance, there are several references to the Chung Hua Trading Company to be organized "for the purpose of carrying [on] foreign trade in order to help the circulation of the said notes." The regulations for this company were authorized by a mandate of August 22, published in the Official Gazette of August 28, as reported in my telegram of August 29, 8 p. m., and in a separate despatch (No. 2229) of to-day's date which the Legation is addressing to the Department, to which I venture to invite attention. 1 In so far as concerns the conflict between the gold-note scheme and the option held by the British, French, Japanese and Russian 'Not printed. banking groups, under the currency loan agreement of 1911, I beg to refer to my telegram of August 17, 5 p. m., and to enclose herewith a copy of the joint protest which the four banks addressed to the Ministry of Finance under date of the 16th ultimo. As reported in my telegram of September 6, 6 p. m. [9 p. m.], Mr. Ts'ao replied to this protest by a note verging upon flippancy, to the effect that the regulations in question had been drawn up in pursuance of a plan of financial currency reform, and that the banks need therefore feel no occasion for anxiety. The matter was thereupon referred to the four interested Legations for further action; and although the Japanese Minister was obliged to request some days' delay in order to obtain the instructions of his Government in this matter, there was at no time any divergence of opinion as to the necessity of supporting the protest originally made by the banks; and on August 31 each of the four Legations sent to the Ministry for Foreign Affairs a note supporting that protest, all four notes in identical terms, except that the Japanese note included two additional paragraphs embodying a further and distinct protest against the adoption of a scheme of currency reform without reference to Baron Sakatani. There is enclosed herewith a clipping from the Peking Leader of the 4th instant,1 in regard to the protest of the Legations, with particular reference to the dualism of Japanese policy as exemplified in the Japanese Minister's joining in a protest against a scheme negotiated by Mr. Nishihara, who is understood to be a personal representative of the Japanese Prime Minister. There is also enclosed a further clipping from the same source,1 quoting the Osaka Mainichi in regard to the antagonism between these two representatives of Japanese interests, and commenting upon the return of Baron Hayashi to Japan. It may be added that Baron Hayashi left Peking on the 6th instant, and at the time of his departure informed me that he expected to return in about five weeks. In this connection I take occasion to enclose herewith clippings from the Peking Leader of September 4 and 5, reprinting from the Far Eastern Review a summary of a recent official publication of the Japanese Ministry of Finance, detailing the steps taken by that ministry to extend Japanese investments in China, through the instrumentality of banks especially privileged for the purpose. Without laying undue emphasis upon the somewhat extraordinary statement of this official declaration, that "because of political instability in China investment in that country was very risky-financial transactions had to be carried on with secrecy and dispatch," I venture to invite the particular attention of the Department to the establishment of a banking group, independent of the Yokohama Specie Bank which had theretofore represented Japan in the consortium for China business, and the designation of the Bank of Chosen, instead of the Specie Bank, "to act as a general financial organ to bring about unity of the currency system," with a view to "helping the establishment of a gold standard everywhere, thereby leading to a fundamental reform of China's currency." 'Not printed. It is now reported that Mr. Nishihara is about to return to Peking, and there is in the minds of those interested in the currency loan agreement of 1911 a question whether it is not his purpose to work with Mr. Ts'ao to defeat the option of the consortium or prevent its renewal upon its expiration on October 14 next. It is accordingly anticipated that the question of gold currency notes, which seems for the time to be in abeyance, may again become critical at that time. It has therefore seemed expedient, as suggested in my telegram of September 6, 6 p. m. [9 p. m.], for the Legation to reserve until then the reiteration of the claim of our Government to be considered in respect to any plans for currency reform, in the sense of the Department's telegram of October 13, 1917.1 I have [etc.] J. V. A. MACMURRAY [Enclosure] The British, French, Japanese, and Russian groups to the Chinese Minister of Finance PEKING, August 16, 1918. SIR: We have the honour to acknowledge receipt of your letter of the 10th instant enclosing for our information a completed memorandum on currency together with a copy of the national coinage law of the third year of the Republic and detailed regulations for giving effect to the same which we understand to be the detailed exposition of the currency proposals of the Chinese Government requested in our letter of the 31st of October 1917. The above documents being of great length some time will be required for their translation; but, from a first examination, it appears that this scheme includes new regulations for the issue of gold currency notes and the organisation of a Currency Bureau. Both these matters are clearly of great importance in currency reform; and as it was agreed in previous correspondence with your Ministry that the proposals for currency reform should be handed to the groups' representatives for consideration and negotiation as the basis of the second reorganisation loan, we note with surprise that the regulations handed to us have simultaneously been promulgated by presidential mandate in the Official Gazette. We would also remind you that we continue to hold an option on the currency reform loan agreement of 1911 which, with the assent of the Chinese Government, is to be incorporated in the second reorganisation loan, and in which our groups have therefore a common interest: and that although modifications in that agreement are clearly necessary, such modifications can only be made by mutual consent. As we consider that the action now taken by the Chinese Government constitutes a serious infringement of our rights we feel that we have no course left but to refer the matter to our Legations. We have [etc.] (Signed by representatives of British, French, Japanese, and Russian groups) File No. 893.51/1995 The Secretary of State to the Chargé in China (MacMurray) [Telegram] WASHINGTON, September 9, 1918, 6 p. m. Has so-called eighty million gold yen currency loan been definitely postponed? LANSING 'Foreign Relations, 1917, p. 149. File No. 893.51/2003 The Chargé in China (MacMurray) to the Secretary of State [Telegram] PEKING, September 13, 1918, 8 p. m. Your telegram September 9, 6 p. m. The conclusion of a loan in connection with the scheme of currency notes is denied by the Minister of Finance but the truth of the matter is nevertheless in doubt. So far as can be learned the enforcement of the gold regulations is in abeyance for time being but while the ultimate intentions of the authorities cannot be known, it is not supposed that they have definitely abandoned the project. MACMURRAY File No. 893.51/2022 The Chargé in China (MacMurray) to the Secretary of State [Telegram-Extract] PEKING, October 5, 1918, 10 a. m. Your September 27, 3 p. m.1 The reply of Minister of Finance to the protest of the four interested Legations reported in my telegram of September 6, 6 p. m. [9 p. m.], transmitted to the Minister for Foreign Affairs on September 26 [was] to the effect that currency reform is a matter of domestic administration and that the measures taken thus far constitute no violation of prior obligations and that auxiliary currency and reorganization loan agreements are unimpaired. It is the intention of the consortium bankers to undertake a discussion with the Chinese of the scheme of currency reform proposed by the Ministry of Finance, to request an extension of the option expiring October 14, meanwhile asking their Legations to address notes to the Foreign Office expressing satisfaction that the rights of the banks are recognized without prejudice and stating that the several group representatives have therefore been authorized to discuss the recent Chinese proposal. I fear we can hopefully take no initiative in the matter but must reserve our protest either to force the renewal of the option or eventually to strengthen the bankers of other nationalities in their opposition to the ultimate adoption of currency proposals which they consider worthless and even dangerous. Unless otherwise instructed I shall act in accordance with this view. MACMURRAY File No. 893.51/2028 The Chargé in China (MacMurray) to the Secretary of State [Telegram] PEKING, October 8, 1918, 1 p. m. Your September 27, 3 p. m.1 Consortium bankers and their Legations have replied to the Ministry of Finance in the sense indicated 'Not printed. |