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[This Document is the Property of His Britannic Majesty's Government.]
C O
483
AFFAIRS OF CHINA.
CONFIDENTIAL.
[40975]
37666
REC?
Ref 9 DEC 10
No. 1.
[November 10.]
SECTION 2.
Mr. Max Müller to Sir Edward Grey.-(Received November 10.)
(No. 376. Confidential.) Sir,
Peking, October 26, 1910. WITH reference to Sir John Jordan's despatch No. 488 of the 28th December last, I have the honour to transmit herewith Copy of a further despatch from His Majesty's consul-general at Hankow on the subject of Japanese financial activity in his district.
It would appear that the position of some of the chief native enterprises is becoming seriously compromised to the Yokohama Specie Bank and other Japanese financial houses who are by repeated advances also obtaining a considerable hold over the provincial government finances. Though Mr. Fraser points out that, contrary to the usual practice of foreign banks in the past, the Japanese advances are unac- companied by demands for Imperial or even Government sanction, it is hardly to be expected that the fact will suffice to enable the Chinese Government to save the native enterprises from passing under Japanese control unless they are prepared to pay off loans raised in defiance of Chinese law, or to prevent Japan from exacting substantial concessions should funds not be forthcoming for the timely repayment of the provincial loan bonds. In my despatch No. 368 of the 18th instant, I referred to the indebtedness of the Han Yeh Ping Company to Japanese finances and expressed the hope that the British and Chinese Corporation would be able to come to some arrangement with this, the most important industrial undertaking in the Yang-tzse Valley, which might prevent it from falling entirely into Japanese hands.
I venture to call your attention to the view expressed in the last paragraph of Mr. Fraser's despatch, that so long as the Railway Loan Agreement remains unexecuted there is a risk of combination between the native association and the Japanese financiers and large firms to build the Hupeh railways west and south of Hankow nominally with Chinese subscriptions, but really with the aid of such construction contracts as the Japanese were cager to undertake in 1907.
I have, &c.
W. G. MAX MÜLLER.
Enclosure in No. 1.
Consul-General Fraser to Mr. Max Müller.
(No. 100. Confidential.)
Hankow, October 17, 1910. Sir,
I HAVE the honour to beg attention to the activity of the Yokohama Specie Bank and other Japanese institutions in the matter of financial aid to native enterprises in this district, instances of which have been mentioned incidentally in my despatches and letters.
Thus, when the late Grand Secretary Chang was called to Peking, it was the From references in the Japanese Bank that enabled him to balance his accounts. native press it would seem that his Excellency's indebtedness has been taken over by some of his former subordinates, although it is also stated that the Throne declined to press the strict investigation of his deficit. From the remark of a Chinese official, I surmise that the so-called Belgian concession just above the Gare Fluviale stands pledged to the Japanese Bank which enabled his Excellency to find the redemption price.
The same bank is wont to discount the notes issued by the provincial treasurer, although recently the Hong Kong and Shanghai Bank has been vainly approached.
Mr. V. K. Lee, of the Hanyang Ironworks, tells me that his company owes 3,000,000 yen to the Yokohama Specie Bank and 1,000,000 yen to Messrs. Okura and Co.; these loans being, I believe, independent of an advance of 1,200,000 yeu for a
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