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of each other but with no outstanding leader among them all. They are all met with the same difficulty vant of money: monied men in Hongkong and Centon and abroad are getting tired of pouring their money into a sieve, and they require some kind of security before subscribing much more, either to the Government or to a plot against it.
10.11.
I am informed that the receipts of the Canton Government are $1,250,000 and the expenditure £2,000,000 a month. The Government is therefore in sore straits for it can only main- -tain its position so long as it can satisfy the troops. In these circumstances the Government has been casting round for means to meet the heavy calls upon its resources and to stop the slump in the value of its note issue. Within the last few days it has approached the Hongkong and Shanghai Banking Corporation on the
subject of a loan against the security of the Government Cement Works at Canton. Mr. Stabb replied that he was not prepared to
consider a Provincial loan. Yesterday I had an interview with Lok
Yew a very rich Cantonese from the Straits Settlements who has
recently visited Canton. The Government had tried to borrow
$3,000,000 from him offering in return to lease him the Salt Farm
on what in normal times would be favourable conditions. He did
not consider the security sufficient. Last night I received from
r. Stabb the enclosed extract from a letter from his Manager at
Canton which shows that the Chinese Merchants of Canton and
Hongkong have been induced to come forward with a loan of 85,000,000 on what cannot but be regarded as very slender securi- -ty. The result of this arrangement is that the discount on notes had fallen yesterday in Canton to 28%.
14.
The outlook is regarded by the Chinese in Hongkong as extremely gloomy. They are afraid of serious trouble at any moment and none of them has much hope that the situation can be maintained beyond the end of the year. I myself do not think it can last as long unless financial aid is given to the Government and some serious attempt is made to re-organise its
administration.
helosure