[This Document is the Property of His Britannic Majesty's Government.]
2
year at 7 per cent. lately granted by Japanese banks to his Excellency Sheng; and the Japanese are largely interested in the new cement works at Huang Shih-chiang, the outlet of the company's ironmines. In my despatch No. 9 of the 5th February, 1908, the history and obligations of these mines towards the Japanese were reported.
The Haukow Waterworks and Electric Light Company, a non-official concern, has also borrowed money from Japanese financiers, who always stipulate for first option in case further loans are found necessary, on the security, in defiance of its constitution, of the company's property and plant.
Finally, a large proportion of Hupei's domestic bonds were, as reported in my despatch No. 83 of the 18th December last, taken up by Japanese institutions.
The salient feature of all these transactions, which in ail probability by no means include the whole of their advances, is the absence of any demand for Imperial or even Peking sanction as a condition of lending-a condition on which our banks at least insist.
The result of this complacence was seen in the giving to the Mitsui Company the agency for importing rice from abroad to meet the recent scarcity, and the shipping of troops for Hunan by Japanese steamers.
more money.
Both the Han-Yeh-Ping and the waterworks companies cannot obtain more capital from their shareholders, and neither business can be properly developed without Both of them, there is reason to believe, have been finding the funds required by short loans on onerous terms, until the loan charges threaten to absorb all their profits.
There appears to me to be grave danger lest at no very distant date the lenders may demand to foreclose on the security, and China be forced either to see her two chief enterprises in this district pass under Japanese control, or to pay off these loans raised contrary to Chinese law; while any difficulty over repaying the loan bonds would supply a powerful lever for wringing out valuable concessions.
my
So long as the Railway Loan Agreement remains unexecuted, there is, in opinion, risk of a combination between the native association and the Japanese financiers and large firms to build the lines west and south nominally with Chinese subscriptions, but really with the aid of such construction contracts as the Japanese were eager to undertake in 1907. This idea is reported in my despatches Nos. 49 and 53 of the 28th May and the 18th June, and my private letter of the 30th June of that year.
I have, &c.
C O
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AFFAIRS OF CHINA.
November 11]
RECO
(
CONFIDENTIAL.
REGE 9 FC 10
SECTION 4,
[AMENDED COPY.]
No. 1.
[41245]
Sir Edward Grey to Mr. Max Müller.
Foreign Office, November 11, 1910.
(No. 147.) (Telegraphic.) R.
CHINESE loans. An inter-group agreement for all future loans was signed yesterday in London by representatives of the British, French, German, and American groups who signed the lukuang loan inter-group agreement last year.
The American group engages to use its best endeavours, with the co-operation of the State Department, to persuade the Chinese Government to permit joint signature of the proposed American loan to China for 10,000,000%.
Should these endeavours not be successful, and should the European groups be unwilling for this or other reasons to participate in this loan, the agreement signed yesterday will become null and void so far as the American group is concerned, the other parties reverting to their respective positions as specified in the inter-group agreements of 1909.
(Repeated to Washington.)
[2982 7-4]
E. H. FRASER.
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