in my telegram October 5, 10 a. m., in spite of the fact that on 5th instant the bankers also submitted a memorandum criticizing the gold currency project as premature and impracticable. This action nevertheless appears to have had an unexpectedly bad effect as the Minister of Finance and his clique have at any rate professed to inquire into [interpret?] it as a complete withdrawal of the protest against the gold currency scheme and are believed to be hurrying negotiations for the loan of eighty million yen from the Bank of Chosen.

This precipitates a crisis in which our protest may be helpful and as authorized by your August 21, 3 p. m., I am reiterating the reservation as to the American interest in any project of currency reform. MACMURRAY

File No. 893.51/2068

The Minister in China (Reinsch) to the Secretary of State No. 2287 PEKING, October 23, 1918. SIR: I have the honor to enclose for your information copies of the regulations concerning currency reform promulgated on August 10, 1918; and of a memorandum of an interview between the Minister of Finance and the British, French, Russian and Japanese group representatives on October 21, 1918.2

Most decided exception is being taken by the above representatives and their Ministers to the attempt to anticipate a part of the currency reform, through the gold-note scheme, without previous consultation and agreement with the groups which hold the currency loan option. Moreover, the gold-note scheme is considered in itself absolutely unsound, designed only for private profit, and of such a nature as to add still further to the currency confusion in China.

The failure of the Minister of Finance to give notice to the American Government of the proposal embodied in the gold-note scheme, is made the subject of a note from the Chargé to the Minister for Foreign Affairs, dated October 8, 1918, and of a reinforcing remonstrance by myself, dated October 22 [23], 1918, copies of which are herewith enclosed.

I have [etc.]

[Enclosure 1]

PAUL S. REINSCH

The Chargé in China (MacMurray) to the Chinese Minister for Foreign Affairs (Lu Cheng-hsiang)

No. 857

PEKING, October 8, 1918. EXCELLENCY: I have the honor to recall to your excellency's attention the fact that on October 20, 1917, the Legation had occasion to communicate to the Ministry for Foreign Affairs, under instructions from the Government of the United States, the following statement of views:

Quite apart from any individual contractual interest accruing to the American group under the currency loan agreement of April 15, 1911, the Government of the United States considers that the whole history of the

See enclosure to despatch No. 2197, August 13, 1918, ante, p. 148. 'Not printed.

currency loan project-notably the appeal made to it by the Chinese Government in January 1904, the conference with Dr. Jenks in 1903 and 1904, and the request for a loan for the purpose of monetary reform which in 1910 the Chinese Government addressed not to any individuals but directly to the American Government-constitutes in behalf of the Government of the United States such an interest in the project as entitles it to be considered in reference to any action which the Chinese Government may contemplate with a view to carrying such project into effect. This interest has never been abandoned by the Government of the United States.

Under instructions of the American Government I have the honor to reiterate the foregoing reservation of a right, in behalf of that Government, to be consulted in regard to any project of currency reform which the Chinese Government may propose to adopt.

I avail [etc.]

J. V. A. MACMURRAY

[Enclosure 21

The Minister in China (Reinsch) to the Chinese Minister for Foreign Affairs (Lu Cheng-hsiang)

No. 871

PEKING, October 23, 1918. EXCELLENCY: In a note to your excellency dated October 20, 1917, I brought to your attention the continuing interest of the American Government in the matter of currency reform and loans for that purpose. On October 8, 1918, the American Chargé d'Affaires again called your excellency's attention to this matter. The substance of these representations is that the American Government, having originally interested itself in currency reform and having initiated the entire currency loan project, is entitled to expect from the Chinese Government, as a friendly power, to be consulted with respect to further developments of this enterprise. Notwithstanding these statements made under instructions from the American Government, the Minister of Finance has attempted to take important action in connection with currency reform without giving the American Government an opportunity to consider such proposal.

I therefore have the honor to request that the attention of the Minister of Finance be called in the strongest terms to the subsisting relationship between the Government of China and the Government of the United States in the matter of currency reform. In order to prove its continuing friendship for the American Government it will be desirable for the Chinese Government to instruct the Minister of Finance not to ignore the American Government in this matter which the said Government has had a continuing interest in, and to take no action whatsoever which will interfere with the carrying out of the complete currency reform plan under the loan agreement to which other friendly powers are the parties and in which the United States Government has a continuing interest. I am constrained to state that a failure on the part of the Minister of Finance to observe the demands of this relationship between the Chinese and the American Government can not fail but have detrimental results, which I feel assured your excellency's Government in its traditional and sincere friendship for my country will desire to avoid.

I therefore urgently request that information to this effect be given the Minister of Finance without delay.

I avail [etc.]

PAUL S. REINSCH

File No. 893.51/2060

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

[Telegram]

PEKING, November 8, 1918, 5 p. m. Minister of Finance has extended the currency loan option but on condition that negotiations be taken up without delay. The representatives of the British and French groups urge upon me absolute necessity of immediately sending an American representative to par

ticipate in the negotiations as it will be embarrassing to them to delay action; and on the other hand the initial questions on which basic arrangements will be discussed will be the most important. Even if complete arrangements for international financing have not been made it is essential to the proper conduct of affairs here that an American representative be sent immediately for this particular purpose. Other matters could still be under discussion pending the adoption of complete plans.

REINSCH

File No. 893.51/2078

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

No. 2317

[Extract]

PEKING, November 8, 1918. SIR: In connection with my telegram of even date herewith concerning the currency loan option, I have the honor to state that yesterday Mr. E. G. Hillier, the representative of the British group, and Mr. R. Saint-Pierre, the representative of the French group, called on me to inform me that the Minister of Finance had extended the option. They urged that as the extension had been granted on condition that negotiations for the currency loan should now be taken up, it is of the utmost importance that the United States should, without delay, have a financial representative here. As it had been practically decided that America would participate, they said that it would be very embarrassing to them to continue to ask for delay on account of the absence of an American representative. On the other hand, they felt that it would not be right for them to proceed with the negotiations, as the first conferences on this matter will be most important since in them the basic principles of the loan and of the reform will be discussed.

I have [etc.]

[Enclosure]

PAUL S. REINSCH

The Chinese Acting Minister of Finance (Ts'ao Ju-lin) to the British, French, Russian, and Japanese groups' representatives

MINISTRY OF FINANCE, PEKING, November 5, 1918. GENTLEMEN: I have the honor to acknowledge receipt of your letter enclosing your observations on the currency memorandum which had been handed to you by this Ministry.

Your observations are noted and will be given careful consideration by this Ministry.

Your statement that in view of the importance of currency reform time is necessary for discussion of the memorandum and your request for extension of the currency reform and industrial development loan agreement of 1911 in order that due time may be allowed for full discussion are clearly well founded. I have therefore the honor hereby to authorize the further extension of the agreement for six months, commencing from the 14th of October of this year and terminating on the 14th of April next year.

I have to add that the discussions should take place as soon as possible during this period; if protracted beyond due date, no further extension will be allowed. I have [etc.] TS'AO JU-LIN

91114°-30-18

File No. 893.51/2128

The Ambassador in Japan (Morris) to the Secretary of State

[Telegram]

TOKYO, December 19, 1918, 4 p. m.

Baron Sakatani has formally accepted appointment as financial adviser to the Chinese Government. In an interview published this morning the Baron says:

As I don't want to become a mere ornament, I submit the conditions on which I was prepared to commence work. Among the first schemes which I shall launch is currency reform with a view to the adoption of the gold standard. When the currency reform is completed, trade between Japan and China will become more prosperous than now.

MORRIS

Kirin and Heilungkiang Forestry and Mines Loan'

File No. 893.51/1990

The Chargé in China (MacMurray) to the Secretary of State

No. 2160

[Extract]

2

PEKING, July 27, 1918. SIR: I have the honor to enclose herewith a translation of the agreement between certain Japanese banks and the Chinese Government. for a loan of yen 30,000,000, secured upon the forests and gold mines. of the two Provinces of Kirin and Heilungkiang, recently concluded, together with certain accompanying letters, these translations being those published in the Peking Leader of July 24, 25 and 26, 1918. Although the translations do not claim to be authoritative, I have been reliably informed that they are at least substantially accurate. I venture to direct the particular attention of the Department to Articles 8 and 9 of the principal agreement, the provisions of which appear to establish in favor of Japanese interests an effectively exclusive right of working the forests and gold mines in the two northern provinces of Manchuria. In view of the apparent endeavor to establish such a monopoly as was repudiated by both the Japanese and Chinese Governments in the case of the agreement concerning mines and railways in Manchuria in 1909,3 I have addressed to the Foreign Office a note, a copy of which is enclosed herewith, inviting attention to the earlier case, and requesting to be advised of the authenticity of the translation published in the Leader, in order that I might be able to present for your consideration the question suggested by these provisions.

1

I have [etc.]

J. V. A. MACMURRAY

See also the report of Mr. MacMurray in despatch No. 2348, ante, p. 121. 2 Agreement and letters not printed.

See Foreign Relations, 1909, pp. 121 and 122.

[Enclosure]

The Chargé in China (MacMurray) to the Chinese Minister for Foreign Affairs (Lu Cheng-hsiang)

No. 804

PEKING, July 27, 1918. EXCELLENCY: On the 16th of November 1909 the American Legation addressed a note to the Prince of Ch'ing in regard to the joint Chinese-Japanese agreement of September 4, 1909, for the joint Chinese-Japanese exploitation of mines along the South Manchuria and Antung-Mukden Railway, inquiring whether this agreement involved a monopoly of the rights and privileges of opening mines in the territory designated in the agreement to the exclusion of Americans and others. To this note the Prince of Ch'ing replied on the 18th of November 1909,' stating that the said agreement did not involve a monopoly, nor confer any exclusive rights to mines therein upon Japanese subjects, but that mines in the territory mentioned may, with the consent of the Chinese Government, be exploited by third parties also. On the 25th of November 1909, the Japanese Minister of Foreign Affairs sent a note to the American Embassy at Tokyo, in which he said:

The provisions of the agreement of September 4, in reference to joint exploitation of mines along the railways do not and were not in any way intended to involve a monopoly of the right to discover, open and operate mines in Manchuria, to the exclusion of Americans or any other persons.

In the Peking Leader of July 24, 25, and 26, there appears a translation of the Kirin forestry loan agreement between the Chinese Government and the Japanese banks, together with several notes exchanged. I have the honor to inquire if this may be relied upon as a faithful rendering of the text of the agreement.

In this text Article 8 reads as follows:

The "A" party agrees to pledge to the "B" party the following articles as security for the repayment of the loan and the payment of interest: (1) All the gold mines and government-owned forests in the two provinces of Kirin and Heilungkiang.

Article 9 reads in part as follows:

Whenever, during the currency of this agreement, the "A" party desires to contract a loan or loans from another party on the aforesaid gold mines and government-owned forests or on other incomes derived therefrom, the said party shall consult with the "B" party beforehand.

In view of the questions suggested by the provisions quoted I have the honor to request your excellency to be so good as to advise me as to the accuracy of the texts of the loan agreement and of the five attached letters, in order that I may be enabled to lay the matter before my Government for its consideration.

I avail [etc.]

J. V. A. MACMURRAY

File No. 893.51/1972

The Chargé in China (MacMurray) to the Secretary of State

[Telegram]

PEKING, August 22, 1918, 6 p. m. In reply to my inquiry of the Foreign Office concerning another exclusive concession to Japanese interests under the agreement for a loan on the security of forests and mines in Kirin and Heilungkiang