The Washington herald., 1921-12-24
ASKS GUARANTEES
CONCERNING use
OFLOANS BY CHINA
Japan Points to Need of
Supervision of Ex-
penditures.

The Japanese will continue to in
,sist upon adequate guarantees from
the Chinese that all money advanced
will be used for purposes for which
It Is loaned. which Will mean a form
of scrutiny over Chinese financial af-
fairs.
This was made cIear yesterday by
Masunosuke Odagiri. financial adviser
to the Japanese delegation in WASH
ington. one of thespest known experts
on Chinese internal finances, Mr..
Odagiri explained that while the con
sortium was not included in the
agenda for the conference on Far
East a:airs, 1t was necessary that
the position OF Japan be put before
the public in view of statements pub
lished in the press in the United
States.
The formal abatement follows:
Issues. Onic. al statement.
The present consortIum, as
Thomas w. Lamont, of the Ameri-
can Banking Group. has recently
written, was formed at the instance
of the governments of the United
States. Great Britain, France and
Japan. with view to. ending COM
petition in the furnishing of pub
lie funds to China. The object of
creating friendly cooperation
among the bankers of those coun-
tries was with the hope that this
action would contribute to the res
toration of a healthier and more
stable economic and financial con-
dittion in China. When these four
countries saw that China was in
serious financial difficulties they
got together in an effort to help
her avoid what might become a
calamity. other nations have been
wrecked by unlimited borrowing
and IL was desired to save China
from such a fate.
Unable TO Avoid DIFFICULTIES.
Under existing internal handi-
caps, the Chinese government has
been unable up to the preserS a.
extricate the country from its diffi-
| culties. Some of the government
officials have not exempiifcl the
traditions of honesty which made
the Chinese merchants of the nine
| teenth century notable IN their
| dealings with foreigners. Inc rec
ord of Chinese credit, up to recent
| time, is one of the best examples
in history of the highly profitable
character of a reputation for hon.
esty, though the integrity of the
merchants has not extended fully
to the governing classes. The mo-
ment it should become clear that
/ money loaned in China would be
| honestly and effectively used, the
] need for precautions on the part
= of foreign bankers and foreign gov
: ernments would disappear.
China Needs Big Loans.
mo nation alone could furnish the
I capital for China's gigantic con-
struction and reorganization needs.
In the case only Of communicate
the requirement is for billions of
! dollars. There are approximately
only 5000 miles of railway in China.
though her territory is considerably
larger than the United States and
] the population is believed to be
400, 10000 In the United States
there are over 100000 miles Of
railway.
Loans of such size as China's
needs involve are not made by capt.
talists. The capitalists only under
write them for disposal to investors.
The bonds cannot be sold success
fully unless they are absolutely Sc
cure, and the income from them is
attractive. A prime requisite for
such security is a condition of re-
spect for property rights