of £400,000 provided for in the currency-loan contract until the 14th day of April, 1913. and requesting the Finance Minister to appoint a time to meet your groups to formally extend the time and sign the bond. In reply I desire to express my thanks and appreciation of the kindness the groups have shown in this matter. I am sending to confer with you at your office Mr. Wang Shih Teng, a departmental chief in the Ministry of Finance. He will take up with you the various points referred to in your letter under reply and as soon as the contract for extension of time has been drawn up a time will be set to meet with you at the Ministry of Finance and to jointly affix the required signatures. With compliments [etc.] CHOU HSUEH HSI. File No. 893.51/1321. The American Group to the Secretary of State. NEW YORK, February 25, 1913. SIR: We enclose herewith, for your information, a copy of a letter received by us from Messers. Morgan, Grenfell & Co., dated February 14th, together with a copy of the memorandum referred to therein, relating to a meeting of the representatives of the four groups and Dr. Vissering in London, on January 11th, 1913. Very truly yours, WILLARD STRAIGHT. [Inclosure.] Morgan, Grenfell & Co. to the American Group. LONDON, E. C., February 14, 1913. DEAR SIRS: We inclose herewith 6 copies of a memorandum made by Mr. Whigham of the conversation between Dr. Vissering and the representatives of the four groups at their meeting with him on Saturday the 11th January. The memorandum was made by Mr. Whigham next day from memory and cannot therefore be considered in any way a complete record of Dr. Vissering's statements, but it has been submitted to Dr. Melchior and Mr. Addis, who were both present, and who have agreed that it gives a fair account of the main points covered in the discussion. Personally we consider that the meeting with Dr. Vissering was very disappointing. Without venturing to criticise the views of such an expert in currency matters, it appeared to us that his statements were mostly those which might be found in any text-book on currency reform, but that he evaded the whole practical problem, viz., whether the results which had been found to cbtain in states and communities with strong governments, which can to a certain extent enforce their wishes in currency matters, would obtain in China where the Government is weak and the population are peculiarly governed by customs and prejudice. Yours very truly, MORGAN, GRENFELL & Co. [Subinclosure Memorandum--Summary.] Dr. Vissering explained that he had originally been invited by the former Manchu Government to act as financial adviser to China in connection with the currency-reform proposals as outlined in the currency-loan agreement. Owing to the revolution, the matter was suspended. Thereafter the Provisional Government asked him to act as its financial adviser and in August or Septemher, 1912, he went to Peking, conferred with a currency-reform committee composed entirely of Chinese, and concluded a contract as Adviser. He had previously prepared a pamphlet fully explaining his currency-reform proposals, which was presented to the Chinese committee and to the banking groups, and he now explained his incomplete further plans, relating to the organization of a requisite central bank. He considered China not yet ready for a completely gold basis; a gold exchange basis would best solve the present problem, similar to those adopted in British India and some of the Dutch colonies; for this solution a central bank would not at first require a considerable gold reserve but would issue notes against first-class financial bills payable in gold in European and American centers, thus gradually accumulating a gold reserve in those centers. Neither would a central bank at first undertake ordinary or financial business but would confine its operations entirely to monetary matters. At first it would issue its notes only against gold or gold values and not for services, etc.; the notes sɔ issued would thus go readily into and remain in circulation side by side with the existing silver coinage, gradually becom ing a part of the circulating medium. Messrs. Urbig, Addis and Simon, practical bankers in China, thought Dr. Vissering's proposals impracticable, but their differences with him seemed matters of opinion rather than of principle. They thought the notes issued as indicated by him would not remain in circulation but would at once be presented at the central bank for payment in gold, thus rendering the whole scheme inoperative and forcing the bank soon to close its doors as, being debarred from commercial business, it could make no profits and must eventually suffer losses. File No. 893.51/1385. The American Group to the Secretary of State. [Extract.] NEW YORK, April 12, 1913. SIR: We beg to enclose herewith, for your information and files, a copy of a letter addressed to us by his excellency Chang Yin Tang, the Chinese Minister in Washington, together with a copy of our reply of to-day, regarding the currency loan. Also we send you herewith a copy of a cable received to-day from Messrs. Morgan, Grenfell & Co., a copy of our reply to this message, quoting our cable to Mr. F. H. McKnight, in Peking, a copy of which is also enclosed. Very truly yours, WILLARD STRAIGHT. [Inclosure 1.] The Chinese Minister to the Representative of the American Group. LEGATION OF CHINA, Washington, April 11, 1913. DEAR SIR: I am in receipt of a cablegram from the Ministry of Finance, requesting me to invite your attention to the currency-reform and industrial-loan agreement of April 15, 1910 [1911], to which the American group were parties, and to inquire whether arrangements have been made in accordance with the said agreement for the sale of bonds. As the agreement was entered into with the four groups under the leadership of the American Group, the Ministry is particularly desirous to be informed of the position of your principals in the premises. Yours very truly, CHANG YIN TANG. [Inclosure 2.] The Representative of the American Group to the Chinese Minister. NEW YORK, April 12, 1913. YOUR EXCELLENCY: Referring to your letter of April 11th, we beg to say that, owing to circumstances with which your excellency is familiar, it has been impossible to arrange for the issue of the currency loan, and, under the arrangements with your excellency's Government, the period in which the loan may be issued will expire on April 14th next, a date before which, of course, it will be impossible to make the issue. In response to your excellency's inquiry as to the position of the American group, I have the honor to inform you that we have been obliged to withdraw from Chinese business, and have therefore cabled our representative in Peking that the American group will not request any extension of the period within which the loan may be issued. We trust that this is an adequate answer to your excellency's communication. Very truly yours, [Inclosure 3-Telegram.] WILLARD STRAIGHT. Messrs. Morgan, Grenfell & Co. to the American Group. LONDON, April 12, 1913. Currency. Impossible to get any answer from European groups today in time for decision. We leave it to you therefore to cable McKnight that while willing continue advance you will take no steps continue option. It will then be for English, French, German groups act as they think fit in the matter and we have advised them accordingly. [Inclosure 4-Telegram.] The American Group to Messrs. Morgan, Grenfell & Co. NEW YORK, April 12, 1913. Currency. Refer to your cable of today. We have cabled McKnight today as follows: The American Group to their Representative. NEW YORK, April 12, 1913. Currency. Being obliged withdraw from Chinese business we will not for ourselves request extension option on currency loan and have so advised Chinese Minister Washington in reply to enquiry from him. It is our strong desire to serve other groups. We have therefore advised them if they should wish extension of option, which they may, In view of reorganization loan not being yet completed, we would be willing extend with them our interest in advance but would not retain interest in option. You will therefore on April 14th cooperate with representatives of other groups to secure extension if requested by them to do so after making our position as above clear to them and Chinese Government. If not so requested you will on April 14th advise Chinese Government that the American group will not request extension of option, thereby relieving American group of any responsibility moral or otherwise in currency loan, advance made by us thereby becoming due and payable under terms of agreement. In view however suggestion State Department regarding reorganization-loan advances we will consider reasonable extension payment of advance if Chinese so desire. We have been unable to definitely learn attitude other groups on this question and they may therefore communicate instructions direct to Peking. File No. 893.51/1386. The American Group to the Secretary of State. NEW YORK, April 15, 1913. SIR: Referring to our letter of April 12th, outlining the position of the American group as regards the currency loan, we beg to enclose herewith a copy of a telegram from Messrs. Morgan, Grenfell & Co., transmitting a message received from Peking reporting the action taken in pursuance of our telegraphic instructions to Mr. F. H. McKnight, in Peking, a copy of which was transmitted to you with our letter above referred to. Very truly yours, WILLARD STRAIGHT. [Inclosure-Telegram.] Morgan, Grenfell & Co. to the American Group. LONDON, April 15, 1913. Hong Kong & Shanghai Banking Corporation have received a cable from Peking, as follows: Following for four groups: Currency loan. We have written Minister of Finance provided Chinese will pay forthwith accrued interest to date and will extend agreement in favor of English, French, German groups to October 14th next, all the four groups are prepared to extend £400,000 advance for six months subject to prior payments at option of groups out of proceeds any comprehensive reorganization loan which may be issued in the meantime. American representative cooperates with representatives other three groups, but we have explained Chinese that interest in [sic] American group in loan agreement ceases April 14th and that if extension granted all their obligations and rights thereunder will be assumed by English, French, German groups. MORGAN, GRENFELL & CO. CHINGHUA COLLEGE LOANS. File No. 893.51/1365. The American Group to the Secretary of State. [Extract.] NEW YORK, March 31, 1913. * * * SIR: Supplementing our letter of March 19th' covering transactions with the Chinese Government in which we referred to certain arrangements already made by us jointly with the British, German, French, Russian and Japanese financial groups, we beg now also to call your attention to the two loans which we separately have made to the Chinese Government for the maintenance of its organization for the education of Chinese young men in the United States under the arrangement made following the remission by the United States of a portion of the Boxer indemnity. We authorized Mr. F. H. McKnight, our representative in Peking, to contract to lend to the Chinese Government for the purposes mentioned above the sum of $200,000. This agreement, which was approved by the American Minister at Peking, was signed on the twenty-sixth day of November, 1912. We have now advanced to the Provisional Government of China $160,000 on account of this loan of $200,000 contracted for on November 26th, 1912. In accordance with the request of the Chinese Government, communicated through Mr. McKnight, our representative in Peking, we shall, on the first of April, pay $25,000 in Washington to the order of Director Wong Ting for the account of the Chinese Government, and transmit the sum of $15,000 to Peking, which advances will constitute the final installments on account of this loan. * ** ** 1 See p. 171. January 17th, we deposited Under a further contract dated January 14th, 1913, the American group agreed to loan the Chinese Government the sum of $185,000 to repay the advance obtained by it from the International Banking Corporation for the maintenance of students as described above. * ** * with the International Banking Corporation in New York $185,000 to the credit of the Provisional Government of China and to the order of Mr. Wong Ting. The agreements above mentioned were concluded with the approval of the American Minister in Peking, and copies thereof were filed with the American Legation at the capital and, we assume, were transmitted to the Department of State and are now included in your official records. These agreements provide that the loans above mentioned shall be paid from the portion of the Boxer indemnity which is refunded to the Chinese Government by the Government of the United States as each payment of the indemnity is made by the former to the latter. It is our understanding that with the consent of the powers Chinese indemnity payments have been deferred since November 1911. It has been our understanding, moreover, that these arrears would be liquidated from the proceeds of the reorganization loan. Inasmuch as we have withdrawn from the negotiations therefor, as we stated in our letter to the Department on the 19th instant, we now lay this matter before you and beg to request that at such time as you shall deem convenient you will take such steps as may be necessary to arrange for the payment of these obligations by the Chinese Govern ment. Very truly yours, WILLARD STRAIGHT. File No. 893.51/1365. The Secretary of State to the American Group. DEPARTMENT OF STATE, Washington, April 3, 1913. SIS: I have to acknowledge the receipt of your letter of March 31 on the subject of loans made to the Chinese Government for the education of Chinese students in the United States under the arrangement made following the remission of the Boxer indemnity and in reply to state that the matter will be given due consideration by the Department. I am [etc.] W. J. BRYAN. File No. $93.51/1432. The American Group to the Secretary of State. NEW YORK, June 5, 1913. SIR: Referring to our letter of March 31, 1913, regarding the two loans made by the American group to Chinghua College, we beg to enclose herewith a copy of a communication, dated May 13, 1913, |