out of these efforts, Japanese suspicion in the first phase of this situa-
tion transferred itself to the activities of Mr. Monnet in Shanghai. I
assume that Mr. Suma's statement was based upon this suspicion and
a belief that Mr. Monnet's activities merely cloaked his real intention
of preparing the way for some financial assistance to the Chinese from
abroad which would exclude Japanese participation. Mr. Suma doubt-
less takes the point of view that under the Consortium Agreement of
1920 to which the Japanese are parties, financial assistance from
sources included in that agreement but excluding the Japanese would
violate the terms of the agreement. I do not know how else to explain
Mr. Suma's reported attitude.
  The latest information which I have in regard to the China De-
velopment Finance Corporation covers its list of stockholders. This
list of stockholders was given to me in confidence by Mr. Monnet for
communication, in confidence, to Professor James Rogers. The list is
appended upon a separate sheet enclosed with this despatch.85
  The Corporation was formally inaugurated on July 4th, and it
would appear that the Ministry of Finance has authorized the Corpora-
tion to increase the membership of its Board of Directors from eight
to twelve persons. The fact that no public opposition to this act by
the Japanese has developed would indicate that they are prepared
to accept the Corporation as a Chinese corporation.
  Respectfully yours,                   NEsoN TRUSLER JOHNSON

800.503193/17
The Counselor of Legation in China (Peck) to the Minister in China
                           (Johnson) 86

L-431 Diplomatic                       KANKING, August 21, 1934.
  SIR: I have the honor to state that in the course of a visit paid this
morning to Mr. Y. Suma, Secretary of the Japanese Legation residing
in Nanking, Mr. Suma asked me whether I had been following negotia-
tions which he said are in progress between representatives of the
British and Chinese Corporation and the China Development Finance
Corporation, the object being a loan of approximately Yuan $60,000,-
000 for the purpose of completing the Shanghai-Hangehow-Ningpo
Railway.
  I told him that I had merely noted casually in the press the statement
that the Chinese were trying to complete this line.
  Mr. Suma said that his information was to the effect that the British
and Chinese Corporation, basing their position on their old contract

'Not printed.
' Copy transmitted to the Department by the Minister in China In his despatch
No. 2944, August 28; received September 24.



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