The Chinese Reorganization Loan of 1913: International Loan Contracts and the Question of Consent

Abstract This article explores the legal and ethical debates among U.S. leaders surrounding China’s Reorganization Loan of 1913. It argues that American empire in China justified itself not only on the idea that China was a lesser or unequal state, but also, paradoxically, on the idea that China was a coequal sovereign that “consented” to foreign involvement. The Reorganization Loan was a large loan that the Chinese government took out from a consortium of foreign banks. As a condition on the loan, China agreed to concede power to foreign advisors over the country’s salt administration, a major source of public revenue. The Reorganization Loan sparked debate among U.S. leaders. President Woodrow Wilson eventually demanded that U.S. banks withdraw from the deal, claiming that the loan trespassed on China’s independence. The controversy reveals the importance of the idea of “consent” in the operation of American empire in China. This finding deepens understanding of the legal structure of U.S. empire in China. It also reveals continuities between the international lending regime of “semi-colonial” China and the international lending regime that prevails today – where participants still struggle to identify the source and content of limits on the terms to which borrowers can “consent.”