the American banks has arrived in London, and that accordingly there is no person with whom they can communicate in the matter. Messrs. J. P. Morgan and Co.'s London branch say that they have no information.
I shall be greatly obliged if you can let me have your views at as early a moment as possible.
Inclosure in No. 1.
Mr. Knox to Mr. Bryce.
I am, &c.
JAMES BRYCE.
3
Inclosure 3 in No. 1.
)
Mr. H. Wilson to Mr. Bryce.
(Telegraphic.)
YOUR letter dated the 22nd June.
Washington, June 25, 1909.
I am advised that American financial group has appointed J. S. Morgan and Co. its representative in London to discuss with various financial groups the details incident to American participation in railway loans.
Inclosure 4 in No. 1.
My dear Mr. Ambassador,
Washington, June 23, 1909. I BEG to acknowledge the receipt of your letter of the 14th June on the subject of the Hankow-Szechuan Railway Loan and the participation therein of the American
group.
The assurance of the British Government that nothing is or could be farther from their wish than to do anything which could be prejudicial to any rights or obligations existing between the United States and China is duly noted, although I should add that, even in the absence of this specific assurance, the Government of the United States could not have entertained any doubt that such would be the attitude of the Government of His Britannic Majesty.
After citing certain details of the arrangements and negotiations which were conducted by or on behalf of the bankers themselves, your Excellency, I observe, gives me to understand that your Government, with a very proper regard for the interests of the British bankers, has not been without some apprehension lest these might possibly suffer by the insistence of the Government of the United States upon its right to demand of China an equal share in the proposed loan.
I am happy in turn to assure your Excellency that the Government of the United States would certainly not wish to injure by its policy the legitimate interests of the British, French, or German bankers affected. This Government does not, however, share in the apprehension which your Government at first felt, and I am happy to find myself quite persuaded that the maintenance of our rights would in no wise jeopardise the interests of the British subjects in the arrangement. I need hardly assure you that our attitude will be as considerate of those interests as our plain duty shall permit.
On Thursday, the 17th, again on Friday, the 18th, and again on Monday, the 21st, Mr. Mitchell Innes, of your embassy, who made enquiries on your Excellency's behalf, was most fully and frankly explained the position of the United States. Knowing that you had thus been informed, I had not hastened to reply to your letter now under acknowledgment. I am sure also that what has been communicated through Mr. Innes will have made clear to your Excellency the fact that the Government of the United States finds itself entirely unable to modify the instructions to the legation at Peking, or to admit that a third Government, and much less that a group of foreign bankers, could expect to induce this Government to relinquish a right acquired for the benefit of its citizens through an official assurance from another Government.
I am happy to say that our latest advices from Peking indicate that the loan agreement may soon be settled upon a basis of equal participation. Apparently it remains only for the British, French, and German bankers to come to terms with our own in a manner which this Government could accept as satisfactory. As we all know, foreign bankers in China are quite dependent upon their home Governments, and it is a corollary to this fact that it would be extremely easy for the Governments concerned to put an immediate stop to the present controversy by intimating to their bankers that they should yield to the American group the share to which this Government holds a right for them by the pledge of China.
I am, indeed, to-day informed that the German Government has already adopted this course.
I am, &c.
P. C. KNOX.
Dear Mr. Secretary,
Mr. Bryce to Mr. Knox,
North-East Harbour, Maine, June 24, 1909. 1 AM desired by His Majesty's Government to say to you that there would appear to be some misapprehension in the mind of your Government as to the attitude of His Majesty's Government. Sir Edward Grey's idea in speaking to the United States Ambassador in London was not to refer the United States to the British bank in China, but to suggest that a representative of the United States syndicate should meet in Europe representatives of the British, French, and German groups, and should arrange all details as to financial co-operation of the former on the understanding that the agreement already signed is left undisturbed. Sir Edward Grey is most anxious that an arrangement should be concluded for the participation of the American group, and he still believes that this is the only means by which continued confusion can be avoided. As regards the matter of li-kin dues which are pledged for payment of interest on the loan, no question of interference with Chinese administration will arise. According to the agreement concluded, it is provided that the hypothecation of li-kin shall not interfere in the matter with the reform of customs or alteration in the tariff, and that, should the li-kin dues be hereafter abolished, some other security will be provided by China in its place. His Majesty's Government understand that the French and German groups are as desirous as is the British group of welcoming American co-operation, and are equally convinced that the best mode of arriving at a practical solution will be that representatives of all four groups should meet as soon as possible in conference in London or in one of the continental capitals. The United States representative would be furnished with the agreement concluded, and would be supplied with all information.
I hope that you will see in this suggestion a means of speedily adjusting the matter, and I trust to have an early expression of the views of your Government.
I am, &c.
JAMES BRYCE.
87
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