[This Document is the Property of His Britannic Majesty's Government.]
185
AFFAIRS OF CHINA.
1163
CONFIDENTIAL,
[December 23.]
SECTION 1.
[46318]
16 13 JAN 11
No. 1.
&
(No. 439.) Sir,
Sir J. Jordan to Sir Edward Grey.-(Received December 23.)
Peking, December 6, 1910, IN his despatch No. 386 of the 28th October on the financial situation Mr. Max Müller mentioned, amongst other evidence of China's need of money, an issue in the summer of Anhui provincial bonds for 1,200,000 Kuping taels and reported that Messrs. Samuel, MacGregor, and Co. (Limited), of Shanghai, had been in treaty for the purchase of 1,000,000 dollars worth of these bonds.
The matter was first brought to the notice of His Majesty's Legation by Messrs. Samuel, MacGregor, and Co., in May last, and in pursuance of a request from them the Wai-wu Pu were asked by Mr. Max Müller to define the conditions as to security, &c. The reply was to the effect that the issue of the loan had been sanctioned by Imperial decree. Security was to be provided by miscellaneous funds in the provincial treasury and the local li-kin revenue amounting in all to 290,000 taels a-year. These sums, it was stated by the Board of Finance, could not be paid out for any other purpose. It was added that there was nothing in the regulations with regard to this loan which forbad the acquisition of the bonds by foreigners. The terms of the Wai-wn Pu's note having been communicated to Messrs. Samuel and MacGregor, the latter expressed themselves as quite satisfied with it.
On the 24th June, Mr. Max Müller was informed by the acting British consul at Wuhu, that the firm in question had completed the arrangements for the loan and he authorised Mr. Combe to witness the signatures to the transaction, but a week later he learnt that the negotiations had been broken off owing to the unexpected reluctance of the provincial authorities to sign a contract for the supply of arms which Messrs. Samuel and MacGregor had made a condition of their purchase of the bonds. Until last month nothing more was heard of the matter and I do not know how the difficulty was adjusted, but the negotiations for the loan have now been definitely concluded. Of the issue of 1,200,000 Kuping taels sanctioned by the Throne, no less than 1,100,000 taels face value have been taken up by Messrs. Samuel, MacGregor, and Co., the price paid being 1,067,000 Kuping taels. The issue is in bonds of the face value of 100 Kuping faels each, and it was arranged that the bonds should be handed over to the Hong Kong and Shanghai Bank in exchange for cash payment.
As will be seen from the accompanying copy of a letter from Messrs. Samuel, MacGregor, and Co., the purchase was completed on the 17th November. The security for the service and redemption of the loan is, as already stated, to be provided out of the provincial revenue, but there is some apprehension lest this revenue, previously ear-marked for this loan, has not been pledged again for the service of the recently concluded Tien-tsin-Pukou Railway supplementary loan. I accordingly took an opportunity of speaking to Mr. Mayers on this point, and he explained that the revenues of Anhui were pledged under the Tien-tsin-Pukou agreement only to the amount of 700,000 taels, and considered that it was only this portion of the provincial revenues which was declared to be free from all other loans, charges, or mortgages. He did not think, therefore, that the security necessarily conflicted with the prior pledge made to Messrs. Samuel and Co., the entire revenues of the province being probably largely in excess of the aggregate of the two sums. the same time, he admitted that the lenders in such cases were simply obliged to accept the Chinese statements, and that there was a looseness about the transaction which detracted from the value of the security.
I have, &c.
J. N. JORDAN.
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