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Majesty's Legation, and does not authorise the emission of funds on any foreign
inarket.
The point is of importance to foreign subscribers on account of the cdict, issued in November 1891, by which the Chinese Government expressly disclaimed all responsibility for any foreign loans not specially confirmed by them. The above edict was communicated in a note from the Tsung-li Yamên to Sir John Walsham, dated the 4th December, 1891. This notification was, as your Highness is doubtless aware, repeated and emphasized in a further note which the Wai-Wu Pu addressed to the various legations on the 15th May, 1908. Moreover, at the time this latter note was issued your Highness's Board stated, in reply to an enquiry addressed to them by this legation, that it embraced not only provincial loans, but loans contracted by Government departments in Peking.
His Majesty's Secretary of State for Foreign Affairs has therefore instructed me to state that, in view of the fact that His Majesty's Government have been repeatedly requested to bring to the knowledge of British subjects the edict of 1891, they are justified in asking whether this loan is a Government one, or one of those for which the Chinese Government accept no responsibility.
I have the honour to request that your Highness will give your early attention to this important question, and favour me with a reply for transmission by telegraph to His Majesty's Government with as little delay as possible.
(Translation.) Sir,
I avail, &c.
Inclosure 2 in No. 1.
Prince Ch'ing to Sir J. Jordan.
W. G. MAX MÜLLER.
Peking, December 1, 1910. I HAVE the honour to acknowledge the receipt of Mr. Max Müller's note of the 18th November on the question of a loan recently issued in London under the name of "The Imperial Chinese Government 7 per Cent. Peking-Hankow Railway Redemption Loan.” Mr. Max Müller stated that an analysis of the prospectus showed that this loan is not guaranteed by the Imperial Government, and he asked that attention should be given to this important question and a reply sent to him.
My Beard accordingly communicated with the Board of Communications, and have now received a reply as follows :-
"With reference to the statement made by the British Minister, we have the honour to observe that on the 8th October, 1908, our Board memorialised, and received an Imperial decree sanctioning an issue of public bonds for the redemption of the Peking-Hankow Railway. The bonds, which are issued directly by the Board of Communications and handed over to the Chiao Tung Bank for sale, are by their nature quite different from an ordinary loan contract, and any person is permitted to purchase public bonds of this character. Moreover, as stated clearly in our original inemorial, the payment of interest and capital is guaranteed by the Board of Communications.
"In view of the fact, therefore, that we memorialised and received an Imperial decree on the subject, this loan naturally cannot be regarded as one which has not been guaranteed by the Government.'
I have the honour to transmit the above reply for your Excellency's information.
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I would venture to point out to your Highness that the statement from the Board of Communications does not in any way constitute an answer to the enquiries made by Mr. Max Müller in his note of the 18th November, nor help to solve the perplexity which this loan transaction has caused to His Majesty's Government.
On two separate occasions--in December 1891 and in May 1908-your Highness's Board have formally notified His Majesty's Government that the Imperial Government of China would not accept responsibility for any loan which had not been sanctioned by Imperial decree. It was prescribed that a copy of the decree should either be communicated officially by the Wai-wu Pu to the legation concerned beforehand, or that the foreign financier should ascertain through his legation from the Wai-wu Pu that this condition had been duly fulfilled.
Such is the procedure that governed loan transactions in the past, and the Wai-wu Pu have explicitly assured me that it applied equally to loans contracted by metropolitan authorities. In practice, too, this has been the case. the 30th June, 1908, your Highness officially notified me of a loan contracted by the For instance, on Board of Communications with the Hong Kong and Shanghai Bank, and requested me to inform the bank of the Imperial sanction.
In the case of "The Imperial Chinese Government 7 per Cent. Peking-Hankow Railway Redemption Loan," which was also a loan made by the Board of Communications, none of the foregoing conditions were observed. communicated to this legation beforehand, and no notification was received from the No decree was Wai-wu Pu on the subject.
In these circumstances I have received instructions from His Majesty's Government, by telegraph, to report whether the loan in question is direct obligation of the Chinese Government to the foreign bondholders, and whether the payment of the principal and interest of the loan is guaranteed in sterling by the Imperial Government.
I shall feel much obliged if your Highness will be good enough to furnish me with an answer to these two questions for transmissien to His Majesty's Government.
I avail, &c.
J. N. JORDAN.
Inclosure 3 in No. 1.
I avail, &c.
Prince CHING.
Your Highness,
Sir J. Jordan to Prince Ching.
Peking, December 3, 1910. IN the note which your Highness did me the honour to address to me on the 1st instant, you forwarded to me a copy of a statement made by the Board of Communications relative to the recent issue of a loan in London under the name The Imperial Chinese Government 7 per Cent. Peking-Hankow Railway Redemption Loan.'
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