consortium

n., pl. -ti·a (-tē-ə, -shē-ə).

1. 1. An association or a combination, as of businesses, financial institutions, or investors, for the purpose of engaging in a joint venture.
   2. A cooperative arrangement among groups or institutions: a library consortium.
2. An association or society.
3. Law. The right of a spouse to the company of, help of, affection of, and sexual relations with his or her mate.

[Latin, fellowship, from cōnsors, cōnsort-, partner. See consort.]

consortial con·sor'ti·al adj.

A group made up of two or more individuals, companies or governments that work together toward achieving a chosen objective. Each entity within the consortium is only responsible to the group in respect to the obligations that are set out in the consortium's contract. Therefore, every entity that is under the consortium remains independent in his or her normal business operations and has no say over another member's operations that are not related to the consortium.

Investopedia Says:
Consortiums are often used within the non-profit sector, specifically with educational institutions. They often pool resources such as libraries and professors and share them among the members of the group. Several groups of North American colleges and universities operate under consortiums.

For-profit consortiums also exist, but they are less prevalent. One of the most famous for-profit consortiums is the airline manufacturer Airbus.

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Group of companies formed to promote a common objective or engage in a project of benefit to all the members. The relationship normally entails cooperation and a sharing of resources, sometimes even common ownership.

As generally found in world affairs, consortia are multinational cooperative ventures designed to cope with some common problem, ostensibly apolitical. The best-known consortia, the socalled China consortiums, were banking syndicates—combinations of banking groups from several countries. Lacking adequate capital for export, the United States did not serve as a lender in international financial operations until the twentieth century. When it did begin to take part, American bankers proved to be imperfect instruments for national policy.

The First China Consortium

In the early years of the twentieth century, a number of American financial institutions accumulated capital for which they sought foreign markets. J. P. Morgan and Company, Kuhn, Loeb and Company, and National City Bank of New York were prominent among firms interested in investing funds outside the United States. Opportunities for domestic investment were still plentiful: the United States remained a capital-importing nation, and Europe remained the world's banker until World War I. Opportunities for greater profit, however, were believed to exist abroad, and American bankers became deeply involved in the financial affairs of countries such as Mexico, Cuba, Haiti, the Dominican Republic, and Nicaragua. To a lesser extent, some bankers and industrialists were interested in East Asia, especially China. China was attempting to modernize, preferred U.S. capital to European or Japanese, and the Chinese government was a better credit risk than a number of U.S. state governments.

There were, however, other kinds of risks involved in investing in China. The Caribbean was an American lake, dominated by the growing power of the United States, and investors were confident that the U.S. government would protect their interests in Caribbean countries. But in China all of the great European powers and Japan struggled for advantage, sometimes political as well as economic. With rare exception, the U.S. government had shown itself disinclined to become involved in Chinese affairs, unwilling to give American businessmen support comparable to that which their European and Japanese competitors might reasonably expect from their own governments. As a result, little U.S. capital could be found in China in 1909, when William Howard Taft became president of the United States.

Taft was eager to expand American influence and power, and his administration was noted for its use of "dollar diplomacy" to achieve its ends. Taft not only continued Theodore Roosevelt's support of U.S. economic interests in Latin America, but also backed enterprises in places as remote as Turkey. The most striking contrast between the policies of Taft and Roosevelt could be found in East Asia, where Taft refused to acquiesce in Japanese expansion in Manchuria. He believed that Chinese and Americans shared a mutual interest in preventing Japanese hegemony over China's northeastern provinces and that the development of American economic interests in that region would serve the interests of both nations—perhaps all nations. Several schemes for forcing American capital into Manchuria, most notably the "neutralization" plan of Secretary of State Philander Knox, a scheme for internationalizing Chinese railways, failed; but in China proper the Taft offensive met with one apparent success: American bankers were awarded a share in a loan for the building of the Hankow-Canton or Hukuang Railway and allowed to join what became known as the consortium.

A group of American banking firms had come together in the last year of the Roosevelt administration to explore investment opportunities in East Asia, but had not acted in the absence of interest in the White House or on the part of the secretary of state. When Taft and Knox insisted, early in 1909, that the United States be allowed to participate in the financing of the Hukuang, the existing banking group was formally designated the American group and called upon to play the American role—if the British, French, and German groups, and their respective governments, as well as the Chinese government, would honor the American demand.

In June 1909, as a syndicate of British, French, and German bankers was about to conclude negotiations with the Chinese, Knox filed a formal protest, reminding the Chinese government of assurances it had given in 1904 that the United States would be able to share in any loan to build the Hukuang. Choosing to see the exclusion of the United States as an unfriendly act, Knox threatened to discontinue the remission of indemnity payments resulting from the Boxer Rebellion in 1900. Responding to American pressures, the Chinese urged the British, French, and German bankers to share their concession with the Americans. Almost a year of haggling over the terms of American participation followed, featuring the personal intercession of President Taft and the Department of State's refusal to permit the American group to accept anything less than a full quarter share of all components of the project. The American group, recognizing that its share of the bond issue that would ensue from the Hukuang loan would likely require listing in European exchanges, was willing to compromise with the European bankers in order to retain goodwill and preserve their own profits. The Department of State, however, was far more concerned with American prestige and influence, presumably contingent on the American group's participating on a basis of absolute equality. Finally, in May 1910, an agreement was signed between the three European banking groups and the American group that not only permitted the Americans to share in the Hukuang loan but brought them into the banking syndicate. As of the signing of the agreement, bankers of Great Britain, France, Germany, and the United States were united in a four-power consortium, committed to sharing equally all future business in China.

But the creation of the consortium did not lead to the immediate consummation of the Hukuang loan. To the consternation of the bankers, the Chinese government backed away, fearful that coming to terms with the consortium would exacerbate mounting unrest in China and lead to a revolution. Opposition to foreign control of China's railways was growing among educated Chinese, and there was, in addition, a desire by provincial gentry to prevent central control of railways. The consortium bankers insisted that a preliminary agreement was binding upon the Chinese and asked for and received diplomatic support from their governments. The U.S. minister to China, William J. Calhoun, was greatly embarrassed by instructions that he demand that the Chinese conclude the loan negotiations. He argued that it was undignified, "unworthy of civilized powers," to force a loan on an unwilling government. But Calhoun's protests were brushed aside, and the U.S. government joined in the pressures to which the Chinese succumbed in May 1911. As the Peking government anticipated, conclusion of the £6 million loan led to increased violence in the provinces and ultimately to revolution.

Even Calhoun was willing to drop his opposition to the loan if the loan operations were essential to continued cooperation between the United States and its new European partners in China. In Washington, this cooperation was deemed vital to the furtherance of U.S. interests in China. Participation in the loan was a wedge for American investments, which would lead to expanded U.S. trade, greater public attention to East Asia, and a greater role for the United States in the political affairs of the region. By forcing the consortium to admit American bankers, the Taft administration assumed it had reserved a place at the table at which the future of China would be played out. As long as the game promised to be profitable, the bankers of the American group demonstrated a grudging willingness to play the pawn.

While negotiations over the American role in the Hukuang loan were under way, the American group responded favorably to a Chinese request for another large loan, partly for currency reform and partly for Manchurian development. The Chinese hoped that by turning to the American bankers they could obtain better terms than were available from European bankers—that they could play off the American bankers against the Europeans. To Knox, the Chinese proposal held the dual promise of American hegemony over Chinese finances and an opportunity to penetrate Manchuria in order to fulfill the goal of checking Japanese expansion there. The American banking group, however, brushed aside the visions of both the Chinese and the Department of State by insisting on offering the new loan to the European bankers. Again, the problem was the shortage of capital in the United States, which necessitated an international listing of the bond issue for the loan to be floated successfully. If the American group offered the currency loan to the European groups, the Europeans might prove less disagreeable about having been forced to offer the American group a share in the Hukuang loan and allow the American group to list the bonds of both its loans on European exchanges. Profits for the American bankers would thus be assured. The Chinese were indignant, but once Knox was converted, he bludgeoned them into permitting the currency loan to be taken over by the consortium. The currency loan was never issued, however, because the revolution began.

The creation of the four-power consortium worried the Japanese and Russian governments, especially when they learned that part of the currency loan was earmarked for use in Manchuria. The Russians attempted to block the loan, and, failing at that, they tried unsuccessfully to destroy the consortium by urging the French—to whom they were closely tied, politically and economically—to withdraw. Ultimately, the Russians accepted French assurances that their interests in Manchuria could best be served if they too joined the consortium. As early as November 1910, while the Russians were still being obstructive, the Japanese concluded that their interests could be protected most readily from within and expressed an interest in membership in the consortium.

Knox was willing to allow both the Russians and the Japanese to have a share in the loan business, but not in the management of the consortium. The bankers of the consortium were not eager to share their profits with new partners. Both the British and U.S. governments tried instead to reassure the Russians and Japanese by specifying the particular Manchurian enterprises for which the consortium would provide funds, trying to demonstrate the absence of any intention to threaten the existing interests of the two Manchurian overlords. But the Russians and Japanese continued to fear that the Chinese intended to allow the consortium a monopoly on development loans in Manchuria and were still opposed to the terms of the currency reform loan in October 1911 when the revolution began.

As Ch'ing rule of China disintegrated and warfare spread along the Yangtze River, the U.S. government surrendered its hope of using the consortium or other forms of dollar diplomacy against Japan and Russia in Manchuria. With China less able than ever to protect its own interests in the frontier regions of the empire, Knox and his assistants concluded that American interests could be furthered only by cooperating with Japan and Russia, settling for an equal opportunity to trade in Chinese provinces under their control. The British Foreign Office reached similar conclusions, joining Knox in recommending that Japan and Russia be invited to join the consortium. Both France and Yüan Shih-k'ai, strong man and later president of the Chinese Republic, agreed; but the American bankers, reinforced by the Germans, both government and bankers, opposed Russian participation.

As Yüan's regime began to assert itself over the country, his prime minister, T'ang Shao-i, notified the consortium's representatives in Peking of his interest in a £60 million loan to enable the government to reorganize, pay off advances, and proceed with development projects. In return for an option on the reorganization loan, the consortium bankers agreed to an immediate advance on the currency loan. A few days later the consortium bankers learned that the Chinese had concluded another loan, with a Belgian syndicate that included the Russo-Asiatic Bank—the main instrument of the Russian equivalent of dollar diplomacy. To the Russian government and to bankers of England and France who were excluded from the consortium, the opportunity to disrupt the consortium's efforts to monopolize China's financial transactions proved irresistible. Similarly, the Chinese were delighted to find other bankers to play off against those who combined in order to dictate the terms under which China could obtain foreign capital. The consortium bankers were outraged and broke off negotiations with Yüan's government.

The few bankers involved in the consortium, of whatever nationality, wanted a monopoly over all Chinese loans. Their governments, especially the British and U.S. governments, were uneasy about the demands of their bankers and were more interested in establishing and preserving order in China and in using economic cooperation as a base upon which political cooperation in China could be built. The governments were more receptive to Chinese requests for a relaxation of the foreign controls that the consortium bankers demanded and were ready to admit Japan and Russia to the organization if that was necessary to facilitate operations in China proper. In addition, European political considerations made pacification of Russia imperative to France and Great Britain. Consequently, the French and British governments pressed for the admission of Japan and Russia to the consortium, appeasing the consortium bankers by forcing British and French participants in the Belgian loan to withdraw, which led to cancellation of that transaction.

Although Japan and Russia were both interested in joining the consortium, they stipulated the exclusion of Manchuria and Mongolia from the scope of the organization's operations. The British and French governments were willing to accept the Russo-Japanese terms, and in May 1912, Knox assented, but it was June before a formula agreeable to all concerned could be discovered. In June 1912, the six-power consortium came into existence, and more money was advanced to Yüan's regime. Yüan used the money to consolidate his position against his enemies, especially against Sun Yat-sen's supporters in the south and in parliament.

As Yüan sought more money, the banking groups were caught up by the political machinations of their governments in the selection of foreign advisers to oversee the expenditure of the monies loaned. European politics prevailed as Britain, France, and Russia supported each other's proposals to the detriment of German suggestions. Yüan became increasingly irritated with the consortium, his political opponents anxiously opposed further loans, and the American bankers wearied of the entire process. The U.S. minister to China had never been comfortable with the loan operations, and by 1913, Sir John Jordan, the British minister, considered the consortium arrangements to be of benefit to the one British bank involved but detrimental to British interests generally. To the American bankers there appeared little prospect for reasonable profits. The U.S. government had abandoned hope of playing an important role in Manchuria. Only the principle of cooperation, to which the State Department had dedicated itself, remained. In 1913 the new U.S. president, Woodrow Wilson, did not consider cooperation with European or Japanese imperialists a virtue, and he refused the American group the support it no longer wanted. In April the American role in the consortium was terminated.

Wilson mistrusted the Wall Street bankers of the American group, and he mistrusted their foreign partners. He suspected the consortium of seeking to take advantage of China's weakness to infringe on Chinese sovereignty and to profit at the expense of the Chinese people. He wanted to help China but was determined to find another way. Yüan was pleased, hoping that an American loan on better terms would soon be available. But American money was not forthcoming, and Yüan, desperately in need of money, concluded the reorganization loan with the remaining five members of the consortium. His position thus strengthened, Yüan was able to crush a rebellion led by Sun's Kuomintang (Nationalist) Party.

By April 1915, with Europe embroiled in warfare, Wilson recognized Japan's intent to dominate China, as evidenced by the Twenty-one Demands (1915). To check Japanese imperialism and further American interests in China, he designed his own version of dollar diplomacy. Although hostile to the American group because of its monopolistic practices and attempts to infringe on Chinese sovereignty, Wilson was very much interested in the use of American capital to further the process of Chinese modernization. He failed, however, to elicit interest among other American bankers, and, in response to a request from the Chinese government in 1916, Wilson asked the American group to consider a loan to China.

The member banks wanted to disband the American group but were held together by their inability to rid themselves of their share of the Hukuang loan. They responded negatively to Wilson's proposition, refusing to compete with the consortium and willing to consider a loan outside the scope of the consortium only if the U.S. government would offer a guarantee that China would fulfill its obligations. The government would not offer a guarantee and appealed instead to the bankers' patriotism. But the bankers would lend to China only as a business proposition, and the matter was dropped.

When a U.S. bank outside the American group entered into a loan agreement with the Chinese in 1916, the other consortium banking groups protested angrily. Wilson rejected the protests, warning the British, French, Japanese, and Russian governments against excluding American bankers from participation in Chinese affairs. With most of these governments anxious to avoid conflict with the United States while involved in a life-and-death struggle with the Central Powers in Europe, their bankers could count on little support against an invasion of American capital. There was one hope: British, French, Russian, and Japanese bankers expressed a desire to see the United States rejoin the consortium, to co-opt the United States and contain the financial offensive the American bankers were now presumed capable of launching.

In March 1917 the American group notified the Department of State that it favored accepting the invitation to rejoin the consortium, contending that the time was ripe for advancing American commercial prestige. But Wilson was unyielding: loans should be made directly to China and not through the consortium. The president recognized the overtures from the consortium as an attempt to prevent independent American action.

The Second China Consortium

By June 1918 the Wilson administration was forced to concede failure in its efforts to find American capital for investment in China. Fearing that the Japanese, in the absence of American or European competition, would monopolize Chinese economic affairs, Wilson agreed to allow the American group to join its old associates in a new consortium. The American group was to become more inclusive, admitting to membership banking groups throughout the country, and it would pledge not to undermine Chinese sovereignty. In return, Wilson agreed to announce that the group was offering a loan to China at the suggestion of the government.

The Wilson administration had returned to the conception of an international banking consortium, because no other means could be found to move American capital into China. The American initiative for a new consortium was intended to serve the same purpose independent American loans would have served: the containment of Japanese economic expansion to preserve opportunity for U.S. expansion in China. Given Wilson's faith in the "liberal exceptionalism" of the United States, he readily assumed that U.S. expansion, unlike the Japanese variety, would be salutary for China—that Chinese and American interests were congruent.

For the American group, Thomas W. Lamont of J. P. Morgan and Company met with representatives of the British, French, and Japanese banking groups in May 1919, at the Paris Peace Conference. Lamont proposed and reached rapid agreement on the American plan for pooling all future business in China and for pooling all existing loan agreements and options involving public subscription except those relating to industrial undertakings upon which substantial progress had been made. The efficiency of cooperation and the expectation of the exclusive support of their governments were attractive to the bankers.

In June, however, the Japanese group reported that its government insisted on excluding from the consortium agreement all rights and options held by Japan in Manchuria and Mongolia, where Japan had "special interests." The Japanese expected the United States to consent to the exceptions on the basis of Secretary of State Robert Lansing's recognition of Japan's "special interests" in his 1917 agreement with Viscount Ishii Kikujiro. Once Japan's sphere in Manchuria and Inner Mongolia was thus protected, the Japanese government viewed the consortium with favor, as a means of improving relations with the United States and as an instrument for checking the anticipated torrent of American capital.

The purpose of the consortium, as understood in Washington and London, however, was to eliminate special claims to spheres of influence and to open all of China to cooperative international development. Not only the Wilsonians, but also Lord Curzon, Great Britain's secretary of state for foreign affairs, considered economic imperialism an anachronism in the face of the nationalist movement that was sweeping over China. When the French government expressed fear that refusal to grant the reservations Japan requested would result in the Japanese finding friends outside the circle of their wartime allies, Curzon insisted that the Japanese request was inadmissible and expressed confidence that they would back down in face of the unanimity of the British, French, and American groups supported by their governments.

Months passed as the Japanese and U.S. governments exchanged mutually unsatisfactory counterproposals. In February 1920 Lamont went to Tokyo in an attempt to break the deadlock. One area for possible compromise existed, and the State Department had focused on it in December 1919: Japan's existing economic interests ("vested" interests in Manchuria and Mongolia) could be conceded, excluded from the scope of the consortium. Both sides moved slowly toward this position. To prod the Japanese government, Wilson authorized a threat to reveal the secret protocol of the Lansing-Ishii Agreement, in which Ishii had committed Japan not to seek privileges in China at the expense of other powers.

As the negotiations proceeded, Lamont proposed an exchange of notes between the American and Japanese groups defining the attitudes of foreign bankers toward Japanese economic interests in Manchuria and Mongolia, specifying what would or would not come within the scope of the consortium. Lamont's plan would allow for the acceptance of existing economic facts without giving official governmental recognition. Only the consortium would recognize Japan's economic interests. The American and British ambassadors to Japan liked Lamont's proposal, but the Department of State rejected it and suggested that Lamont reach an agreement on the basis of specific enterprises the Japanese wanted to exclude from the consortium's focus. The U.S. government would not accept a reference to the exclusion of any region of China. Lamont was angered by State Department scruples, but, insisting that Manchuria was in fact dominated by the Japanese and unattractive to nationals of the other banking groups, he was able to reach agreement with his Japanese counterpart on the department's terms. In April 1920 the Japanese government, in a last effort to strengthen the consensus within the leadership, bid once more for veto power over railway construction in Manchuria. If further concessions could be won from Japan's prospective partners, opposition to the agreement within Japan might be stilled. The effort alone might satisfy dissidents within the cabinet that the government had done all that was possible. But the U.S. and British governments held firm and the Japanese appeared to retreat.

In the following month, the Ministry of Foreign Affairs gave the U.S. ambassador, Roland Morris, a "draft reply" to the American rejection of Japan's last set of reservations, claiming that the earlier note had not been presented for the purpose of raising new conditions but simply to avoid future misunderstandings. The Japanese government would not insist on explicit American assurances but would accept the general assurances offered previously and refrain from insisting upon discussion of the veto power it sought initially. The Japanese were satisfied to make known to the U.S. government their interpretation of the questions at issue.

Lamont and the American ambassador were pleased, interpreting the Japanese position as complete acceptance of the position taken by the U.S. government and supported by the British and French governments. But J. V. A. MacMurray, chief of the State Department's Division of Far Eastern Affairs, argued that the Japanese had retracted nothing. MacMurray claimed that the Japanese note reemphasized Japan's claim to a veto on railway construction in Manchuria and had further placed on record their understanding that American assurances regarding Japan's right of self-preservation meant U.S. recognition of that veto power. But MacMurray was overruled; the Department of State accepted the Japanese draft, and the consortium negotiations were concluded.

MacMurray was probably correct when he contended that the Japanese, in addition to receiving explicit acceptance of all of their existing and some of their projected economic interests in Manchuria and Mongolia, had established a strong basis for arguing that the United States had conceded to Japan veto power over railway construction in Manchuria. Certainly that was the view that prevailed in official Japanese circles. But MacMurray's superiors in the Department of State had concluded that the choice was between accepting the conditions obtained or surrendering the idea of the four-power consortium. To the U.S. government there appeared no alternative means of preserving American interests in China. After March 1920, when the Senate for the third time rejected U.S. membership in the League of Nations, the consortium offered the best, perhaps the only, basis for cooperation with the powers in China.

With the formation of the consortium in 1920 and the subsequent agreements reached at the Washington Conference (1921–1922), Great Britain, France, Japan, and the United States were committed to cooperation among themselves in assisting with the modernization of China. The consortium bankers were to provide the Chinese government with the funds it needed to build railroads and other major productive enterprises. But in the six years that followed the Washington Conference, China suffered from almost constant civil strife, and, despite prompting from the U.S. and British governments, the consortium did nothing to assist China's economic development: no loans were granted. The British frequently referred to the consortium as a financial "blockade," designed to prevent the Chinese government from obtaining funds it would presumably misuse.

Similarly, American businessmen anxious to develop or expand their interests in China failed to obtain needed capital. They did not lack support from the U.S. government, within which the Departments of Commerce and State competed to build up American economic interests in China. But American entrepreneurs in China, like the Chinese government, found the consortium an obstacle.

The core of the problem was the divergence between the interests of the Department of State and those of Lamont and his fellow bankers. The department wanted the consortium to provide capital for China's development—to help in the creation of a strong modern China in which American interests would thrive. For the bankers, the remote promise of China could not compete with the more immediate promise of Japan. In 1923 the House of Morgan floated a $150 million loan for the Japanese government, and other smaller loans followed in the mid-1920s. American capital that might have been available to China was lent instead to the Japanese, and some of it, by indirect means—by being "laundered" or simply by freeing other capital—facilitated the expansion of Japanese interests on the Asian mainland. Because the Japanese were competing with the Chinese for American capital, they could use their position in the consortium to discourage loans to China. The American group, led by Lamont, accepted this process. In short, one of the two competitors for capital worked in collusion with the potential lender to deny capital to the other. However permissible among businessmen pursuing profit, it was not consistent with the ends of public policy. Conditions in China, however, left the Department of State no means for changing the direction of the flow of capital. Lamont proved to be remarkably skillful in leading State Department officials to believe that he shared their views but was held back by partners less interested in helping China.

Twice during the early years of the consortium's existence the ability of Lamont and his colleagues to avoid lending money to the Chinese was tested. In both instances, in 1922 and in 1923, the U.S., British, French, and Japanese ministers to China and the Peking representatives of all four banking groups recommended that the loans be granted. In both instances the diplomats and group representatives argued that the consortium could not afford to reject Chinese overtures. But in neither instance could Lamont be moved, supporting or being supported by the head of the British group or the Japanese government in his opposition to taking up the Chinese business.

For the next two years, until the violence subsequent to the May Thirtieth Incident radically changed the context, Lamont and his British counterpart, with at least the public support of their governments, sang in praise of the success of the consortium's negative effort. They had stopped wasteful borrowing by the Chinese government, and their cooperation had a salutary effect on relations among the powers in China. Despite dissatisfaction with the inactivity of the consortium, the U.S. and British governments were anxious to have it remain in existence. For the United States and Great Britain the consortium appeared to have assisted in checking the expansion of Japan's economic hold over China. For the British, continued Anglo-American cooperation in East Asia was itself a valuable end. And the Japanese indicated no dissatisfaction with the consortium, supporting a motion in 1924 to renew the agreement in perpetuity. France, the fourth party to the consortium agreement, appeared to its partners to be apathetic, unreliable, and forever bargaining for some trivial advantage, but supportive of the others when the agreement was renewed.

Although after 1923 there was never again serious consideration of a loan from the consortium to any Chinese regime, the organization continued to exist, at least in theory, until a decision in 1946 that the Japanese attack on U.S. and British forces in 1941 constituted abrogation of the agreement. The persistence of the consortium through the 1930s is remarkable because of the constant desire of the American group to withdraw and because of the determination of the British government to end the agreement in 1937. One stubborn man, Stanley K. Hornbeck of the Division of Far Eastern Affairs, Department of State, continually blocked dissolution, with an assist from the Japanese army in the summer of 1937.

The American group's desire to be rid of the consortium, voiced regularly by Lamont, reflected the leadership's conviction that there was no money to be made out of China and that continuation of the organization was not worth the bother or expense. From 1920 on, Lamont argued that there was no market for Chinese securities in the United States—that the American investor would not touch Chinese bonds until the Chinese demonstrated stability and paid off earlier loans, especially the Hukuang Railway loan, on all issues of which they had defaulted in 1925. After the Banking Act of 1933 prohibited banks of deposit from underwriting or offering securities, Lamont explained to the Department of State that his own firm and most members of the American group could no longer participate in loan operations even if they were to become feasible on a business basis. But for over a quarter of a century, Lamont deferred to the State Department's desire to maintain the consortium. It was not until January 1946 that he succeeded in getting the department to concede unequivocally that no useful purpose would be served by continuing the consortium, with or without the American group in it.

Despite their failure to get the consortium to lend money to China, officials of the Department of State fought to keep the organization in existence. Certainly it was not because American economic interests prospered. Lamont and his colleagues were concerned with their own profits and not with the expansion of the trade of their countrymen or with abstract conceptions of national interest. Sino-American trade remained static in the 1920s and rose slightly only in percentage terms for a few years in the early 1930s. The increase in American investments in China was not impressive. The American group hindered rather than helped the development of U.S. economic interests in China, as the Department of Commerce found when it tried to advance the prospects of American corporations.

Ultimately, men like MacMurray and Horn-beck fought to retain the consortium as a means of keeping the United States involved in East Asia, in the affairs of China. This had always been the fundamental purpose of a policy of cooperation with those powers earlier and more profoundly committed to activism in China. Without hitching a ride, the State Department's East Asian specialists, from John Hay's adviser, William W. Rockhill, through Hornbeck, feared not only that the United States would be deprived of an opportunity to expand its interests in their region, but also that interest in the area to which they were committed would cease to exist in the United States. The promise of U.S. expansion in China, however remote the reality, had become their raison d'être. The consortium, however inadequate, was the only vehicle they had for much of the interwar period.

The International Committee of Bankers on Mexico

Formed in 1919, the International Committee of Bankers on Mexico (ICBM) provides an interesting comparison with the second China consortium. Once again Lamont was the central figure on the American side, and once again the bankers demonstrated that they would act independently of other business interests or the wishes of their government in pursuit of their ends. The ICBM, however, never loomed as large in the plans of the Department of State's Division of Mexican Affairs as the China consortium did in the visions of MacMurray and Hornbeck.

Claiming pressure from European bankers, Lamont solicited the approval of the Department of State for the organization of an international committee of bankers in 1918. In 1919 approval to bring together American, British, and French banking groups concerned with investments in Mexico was granted by the department, with the proviso that control of the committee's policy remain in American hands. Swiss, Dutch, and Belgian banking interests were subsequently given token representation on the committee.

The primary concern of the bankers was to protect the holders of Mexican securities, especially those of the Mexican government. Lamont and his colleagues were at best marginally concerned with the primary issue dividing the U.S. and Mexican governments in 1920: interpretations of Article 27 of the Mexican constitution and its effect on the claims of American oil companies. Fearing debt repudiation, the bankers were unsympathetic to Washington's tactic of withholding recognition from the Mexican government as a means of forcing it to respect the property rights and claims of the oil companies. Whereas the government of the United States wanted all American claims against Mexico to be settled simultaneously, the International Committee of Bankers on Mexico exhibited few inhibitions about negotiating a separate settlement of Mexico's foreign debt.

Restrained initially by the Department of State, Lamont obtained approval to begin negotiations with the administration of Alvaro Obregón in 1921. In June 1922 the Lamont–De la Huerta agreement was reached, recognizing $500 million of indebtedness and arranging for eventual payment. This arrangement paved the way for the Bucareli agreements between the Mexican and United States governments in 1923, ameliorating the differences between the two and leading to recognition of Obregón's regime.

In the years that followed, Mexico had difficulty meeting the schedule established in the Lamont–De la Huerta agreement, and in 1925 Lamont negotiated a new agreement. Payment remained irregular, however, and negotiations between the ICBM and the Mexican government continued throughout the 1920s and 1930s. In 1930 considerable friction arose between Lamont and the U.S. ambassador to Mexico, his former partner Dwight Morrow. Morrow and the Department of State insisted that a separate agreement between the bankers and the Mexican government was contrary to the interests of both the United States and Mexico. Choosing on this occasion to understate the connection between the ICBM and the Department of State, Lamont insisted that he had reached a private arrangement with the Mexican minister of finance and was not asking for the department's consent. Unable to sway Lamont or the Mexican ambassador to the United States, Morrow warned the Mexican government that the United States did not see the agreement with Lamont as a constructive step toward financial stability. The Mexican government capitulated, assuring Morrow it would not submit the agreement to Congress except as a package comprising provisions for all of Mexico's debts. A final settlement between the ICBM and Mexico was not obtained until November 1942 in the Suarez-Lamont agreement ratified by the Mexican congress and the foreign bondholders. Legal problems kept the International Committee of Bankers on Mexico in existence until at least 1948, when its unrecorded demise appears to have occurred. It did not have any political significance after 1930, when it alienated the Department of State. The department was not kept informed of subsequent negotiations between Lamont and Mexican authorities.

The International Committee of Bankers on Mexico resembled the China consortium in that both consisted of groups of bankers from several nations, brought together with the approval of their governments, but ultimately indifferent to the interests of their governments or of other businessmen. The bankers of the ICBM were concerned with their own particularistic interests: any benefit derived from their activities by their governments or other peoples was incidental.

The ICBM differed strikingly from the China consortium in its relationship to the governments of the members' groups. The committee was formed at the initiative of the bankers, and only the government of the United States indicated a deep concern for its activities. There were no international political problems because none of the other countries that were represented had political interests in Mexico. All accepted American hegemony in Mexico, in contrast to the response to Japan's claims to hegemony over Manchuria. The government of the United States had other interests in Mexico and many other ways to exercise influence there. It never saw the committee as an important instrument of policy. After the friction between the Department of State and Lamont in 1930, only the bondholders cared about the future of the committee.

Consortia Since World War Ii

International banking consortia, involving in particular American banks based in New York, continued to be engaged in financing projects in developing countries, especially in Latin America, where they became dangerously overexposed in the 1970s and 1980s. After World War II, however, the U.S. government, specifically its Agency for International Development (AID), and international organizations, specifically the International Bank for Reconstruction and Development (World Bank), became major sources of loans. Both AID and the World Bank, in which U.S. influence has generally prevailed, have served American foreign policy interests far more effectively than did the private bankers of the prewar era.

Bibliography

Borg, Dorothy. The United States and the Far Eastern Crisis of 1933–1938: From the Manchurian Incident Through the Initial Stage of the Undeclared Sino-Japanese War. Cambridge, Mass., 1964. Contains an account of Hornbeck's views and of the fate of the second consortium during the 1930s.

Cohen, Warren I. "America's New Order in East Asia: The Four Power Financial Consortium and China, 1919–1946." In Kwan Wai So and Warren I. Cohen, eds. Essays in the History of China and Chinese-American Relations. East Lansing, Mich., 1982. The most comprehensive account of the second consortium.

Curry, Roy W. Woodrow Wilson and Far Eastern Policy, 1913–1921. New York, 1957. Describes Wilson's initial attitude toward the American group and explains the Wilson administration's decision to create a new consortium.

Field, Frederick V. American Participation in the China Consortiums. Chicago, 1931. A clear and detailed description of both the old and new consortiums. The analysis of the problems of the old consortium is superior to the discussion of the new consortium; in the latter case, Field relied too heavily on Lamont for information.

Hoff, Joan. American Business and Foreign Policy, 1920–1933. Lexington, Ky., 1971. Provides a useful context for the workings of the second consortium and the ICBM, but Hoff did not have access to the Lamont papers.

Lamont, Thomas W. Across World Frontiers. New York, 1951. A charming but unreliable account.

Lewis, John P., and Richard Webb. The World Bank: Its First Half Century. Washington, D.C., 1997. The best starting point for examining the bank's work.

Porter, David. U.S. Economic Foreign Aid: A Case Study of the United States Agency for International Development. New York, 1990. Demonstrates how the agency functions.

Schmitt, Karl M. Mexico and the United States, 1821–1973: Conflict and Coexistence. New York, 1974. Includes reference to the International Committee of Bankers on Mexico in a chapter devoted to land and oil controversies.

Scholes, Walter V., and Marie V. Scholes. The Foreign Policies of the Taft Administration. Columbia, Mo., 1970. Contains an excellent discussion of the workings of the first consortium, based on multi-archival research. It is also important for the context of Taft's East Asian offensive.

Smith, Robert F. The United States and Revolutionary Nationalism in Mexico, 1916–1932. Chicago, 1972. Provides a thoughtful analysis of the problems of a less-developed country in a world in which international law is interpreted by advanced capitalist countries. Smith effectively uses the Lamont papers.

— Warren I. Cohen

This entry contains information applicable to United States law only.

The marital alliance between a husband and wife and their respective right to each other's support, cooperation, aid, and companionship.

Loss of consortium is an actionable injury for which money damages may be awarded. The loss of the love, sexual relations, and services of a spouse are being considered tangible injuries to an increasing extent. An action for loss of consortium is based upon the inconvenience of having a spouse who has been injured. Such injury might result from medical malpractice, assault and battery, negligence, the sale of addictive drugs, wrongful death, or false imprisonment. The key requirement is that the wrongful act has a debilitating effect upon the individual whose spouse is initiating the action.

Consortium encompasses services performed by a spouse. The common law did not recognize a wife's right to services on her husband's part. Since she was viewed as a social and legal inferior, she could not demand that he work for her and, therefore, had no remedy for loss of sexual relations, affection, or services. The wrongdoer was liable only to the husband directly.

A husband was considered to have suffered tangible damages for injury to his wife and, initially, had the sole right to bring an action for loss of consortium. The loss of services that had to be asserted included his wife's general usefulness, household services such as cooking and cleaning, industry, and frugality. Eventually the assumption evolved that a man suffered these impairments upon injury to his wife, and damages were recoverable by him for any period that he was divested of sex, fellowship, and affection, in spite of the fact that his wife might not be responsible for housekeeping.

Subsequently the Married Women's Property Acts (29 Stat. 193 [1896]) emerged. Some states interpreted these acts to mean that a man could no longer sue for the loss of his wife's services, since she was a full legal person. Most states, however, interpreted the acts as extending the right to sue for consortium to a woman. A preponderance of recent cases indicate that either spouse may bring action for loss of consortium.

The overriding reluctance to acknowledge a woman's right to sue for loss of consortium prevailed for a long while, based on the idea that a man's recovery for his own injuries sufficiently compensated his wife.

In 1950, a court held that a woman had a right to sue for loss of consortium. Many states directly repudiated its holding and adhered to the old rule, while others supported the change.

By the late 1970s, many courts revised their views and held that women may sue for loss of consortium. Other jurisdictions refuse to rule in favor of the change on the ground that it can be made only by the state legislatures.

Some states seek to prevent double recoveries by requiring that the spouse who is suing for loss of consortium assert that claim in the same action as the spouse who is suing for damages for injuries. When this might be inconvenient or impossible in some instances, other states require judicial supervision of the second action to ensure that the amount of damages awarded will not be excessive.

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Common misspelling(s) of consortium

• consorcium

Dansk (Danish)
n. - konsortium, ret til omgang med ægtefælle

Nederlands (Dutch)
consortium, recht van man en vrouw op omgang met elkaar

Français (French)
n. - (Fin) consortium

Deutsch (German)
n. - Konsortium (Vereinigung von Firmen)

Ελληνική (Greek)
n. - κοινοπραξία

Italiano (Italian)
consorzio

Português (Portuguese)
n. - consórcio (m), associação (f)

Русский (Russian)
консорциум

Español (Spanish)
n. - consorcio

Svenska (Swedish)
n. - konsortium

中文（简体）(Chinese (Simplified))
协会, 国际资本家联合, 公会

中文（繁體）(Chinese (Traditional))
n. - 協會, 國際資本家聯合, 公會

한국어 (Korean)
n. - 합작기업, 조합, (국제) 차관단

日本語 (Japanese)
n. - 協会, 債権国会議, 配偶者権, コンソーシアム

العربيه (Arabic)
‏(الاسم) اتحاد بين شركات لأنجاز مشروع ضخم, جمعيه, اتحاد‏

עברית (Hebrew)
n. - ‮קונסורציום, שותפות‬

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