2
bonds? and would it not be wise insist, in the interest of future loans, on more explicit admission right of lenders control expenditure?
5. Should we not insist upon service payments fourteen days before due date, as has been customary?
In short, our feeling is agreement less favourable from lenders' point of view than any previous loan to China, and we wonder if it is wise or necessary at this time, in view of uncertain and unfavourable conditions there, establish precedent for such price and terms. However, understand we are simply bringing up these points for your consideration and for submission to conference if you deem advisable, and we are perfectly willing accede to agreement as cabled if that is decision conference,
(Repeat all above to M. M. Warburg and Co. and Morgan, Harjes, and Co., for their information.)
(2.)
W. D. Straight, Peking, to Morgan, Grenfell, and Co., London, March 16, 1911.
Communicate this to other groups following, which has been wired New York direct from Hillier, Cordes, Casenave, Straight. Chinese earnestly hope that, beside the 1,000,0001. for immediate Manchuria requirements, banks will agree to advance the 1,000,000%. required for preliminary expenses currency reform prior to instead of after banks' acceptance programme of currency reform and two statement of expen- diture. Banks to make such Manchuria and currency advance only on receipt of special statement satisfactory to themselves showing nature of and amounts of such preliminary expenditure. All advance to be repaid with 6 per cent. accrued interest other first proceeds of loan or by Board of Finance if contract becomes null and void by banks non-acceptance of programme of currency reform and two statement of expenditure or by operation force majeure clause. Chinese will find it difficult to repay advance except other proceeds of loan and by increasing their indebtedness to you you will place yourselves in much stronger position to press upon them acceptance such modification as you may wish to make in their programme of currency reform or in the form of their two statement of expenditure. By consenting make advance as requested you will greatly facilitate negotiations, and, in view of all the circumstances, we recommend you do so.
(3.)
J. P. Moryan and Co., New York, to London, March 16, 1911.
HUKUANG. Our Government approves suggested change, and has so advised United States Minister, Peking. We are notifying Straight of American group's approval.
(Repeat to M. M. Warburg and Co. and Morgan, Harjes, and Co., for their information.)
[This Document is the Property of His Britannic Majesty's Government.]
[B]
AFFAIRS OF CHINA.
CO
13346
[March 20.]
CONFIDENTIAL.
[10115]
No. 1.
SECTION 1
Sir J. Jordan to Sir Edward Grey.—(Received March 20.) (No. 86. Confidential.) Sir,
Peking, February 23, 1911. IT has been known for some time past that the Russian Government were gravely dissatisfied with the manner in which the treaty of 1881 was being enforced, and my despatch No. 36 of the 18th January last showed that this dissatisfaction had reached a point which foreshadowed the possibility of complications. But the uote which the Russian Minister, under instructions from his Government, delivered to the Wai-wu Pu on the 16th instant came as a surprise both to the Chinese Government and the foreign legations in Peking, and can scarcely be regarded as merely the natural outcome of the differences between the two Governments regarding the interpretation of the 1881 treaty.
The Russian Minister states that ever since the Russo-Japanese war there has been a marked change in the attitude which China has adopted in her relations with Russia. His predecessor, M. Pekotilow, had contrived to a certain extent to minimise the effect of this change, and had succeeded in convincing his Government that it was merely of a temporary nature. M. Korostovetz, however, on his return to China after an absence of several years, realised how low the prestige of Russia had sunk as compared with what it was in the time before the war, and claims to have considered it his duty to make the truth known to his Government at St. Petersburgh. While on furlough last summer he was summoned to attend a meeting of representatives of the various Ministries at which the whole question of Russia's relations with China was discussed. At this conference he says that he caused some surprise by stating that the treaty of 1881 existed merely on paper, and that the legation archives at Peking attested to its repeated infringement in practice. The result was that on his return to his post he received instructions to submit to the Chinese Government a full list of the cases in which the treaty had been violated and to request suitable redress. He accordingly furnished the Wai-wu Pu in December last with a statement of thirty-five concrete instances of treaty violation, but as usual received no reply. His representations, both verbal and written, baving for years been treated by the Chinese with "derision," he placed the whole question in the hands of his Government who prepared the note of the 16th instant and directed him to deliver it in person to the Wai-wu Pu.
Before complying with these instructions, he considered it his duty to point out to his Government that the form in which the note was couched made it easy for China to render a reply which would evade the essential issues in question. The note merely invited China to re-affirm the principles of the treaty, and the Wai-wu Pu would have no hesitation in giving the necessary assurances so long as they were not obliged to observe them in practice. What was wanted was not an acceptance in principle, but enforcement in practice of treaty engagements.
M. Korostovetz's objections were, however, overruled at St. Petersburgh, and he was instructed to present the note in the form in which he had received it.
The texts of the note and of the Chinese reply have both been published, and a comparison of them shows that M. Korostovetz's predictions have to a large extent been fulfilled.
The first clause of the Russian note, as published here, states that neither the treaty of 1881 nor the other international Acts limit the right of the Russian Government to establish a tariff for imports and exports in Siberia outside of the zone of 50 versts (100 li) along the frontier, and states that within this zone both the countries enjoy the right of free trade.
The Chinese reply admits the latter part of this contention, and adds that it has always been enforced in accordance with the treaty. As to customs procedure in Siberia outside of the free zone of 50 versts, the Chinese reply explains that a request
[1918 u-1]
98
May