New-York tribune., 1918-07-02

10 WIN the election of 1912 by denouncinp
"ep"olcan policies, aid they received som.
OF their thunder from rivals Of the Amer
can group of banks which, at secreto~r
knox's request, participated in tho r,.ar
national Consortum
The scheme had its fault II is ;rono.u:
bic to create any international scheme +ho.
will be perfect and pinch no natio, 49,
group of men anywhere. 1t ia ou;+a 49,
possible to devise perfect project ro1,.
ing to situation like that nrevo;i;, :.
CHINA. But this one had important ad-
vantages, which we see the Adninistr.
tion now seeking to revive
In 1904 the Russo-Japanese war resr,.os
from the most aggressive form that ev
ploitation and concession hunting took in
China. The Russian government par.ici-
pated in wringing or buying concession,
from the corruptible, incapable and defence.
less Chinese officials, and the Japanese went
to war to drive the Russians out Of tbs
undeveioped and wasted province of Man
chura They failed in their effort, driving
the Russians only part way back and then
adopted policy Of holding South Man
churla, while the Russians held the north.
Some time after the conclusion of the
Russo-Japanese war certain banking groups
of the leading lending nations (France
Britain and Germany adopted new policy
and came to an agreement pledging them
selves in future to make no loans to China
and accept no concessions from her except
jointly, each national group obtaining a
one-third part of all such transactions.
The governments were parties to the plan.
agreeing, for their part, to discourage any
and all loans which other banks OF their
nationality should seek to make in China,
Under the Knox administration orr State
Department decided to take part in the
China question. We made proposals to in.
ternationalize the railways of Manchuria
but neither the Japanese nor Russians
would agree. Then the department pro-
ceeded to organize an American group Of
bankers-which was formed by ]. P Nor.
gan & Co., the First National Bank the
National City Bank and Kuhn, Loeb {. Co.
Mr.. W. d. Straight, then consul general
at Mukden, in Manchuria, resigned fror,
the consular service to become the agent of
the group, proceeded to Peking, and with
the assistance Of the American Legation
there obtained railway concessions and
later made a loan to the Chinese govern
ment.
Later, when China sought to obtain a
loan from the Four Power Consortium for
the development of the Japanese and Rus
sian sphere Of influence, Manchuria, the
japanese and Russian governments oh,
tanned admission to the Consortium, max
ing it (in 1922 six-power group.
1t is indicative of the safeguarding char
acter OF such internatonalization that
countries like Japan and Russia sufficiently
respected the power and prestige of tha
Consortium to refrain from opposing If and
to seek to become members of il. Thev
were not lending nations, and had to hor
row much Of what they loaned to China
but, as is evident the Consortium had now
become a substantial international laaone
for the control Of the development Of China
and the restriction of her future borrowing
to legitimate needs
When the State Department, under Presi.
dent Wilson's administration, withdrew the
pledges given by Secretary Knox to the
American group it was impossible for the
American banks to fulfil their share of tho
agreement, for other American banks were
now to have the assistance and encourage
ment Of the State Department in making
uncontrolled loans to China in competition
with the Consortium The withdrawal of
the American group left the Consortium
. tlve-power group, which operated as such
TIL the present war began.
But the American government found no
other American bankers willing to make
uncontrolled. and therefore unsafe, loans
to China on a large scale; and the Chinese
being unable because of the war to obtain
money from Europe, have had to go to
japanese banks for money up to the pres
ent.
Now the government asks Mr. Morgan to
go back to China, and, according to the
newspapers, Mr.. Morgan agrees to 60 and
lend money as the agent of the Consortium
presumably leaving out Germany and per-
haps Russia), thereby keeping the pledge
Of his group and also making certain the
support In this international scheme of the