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5. Supervision of melting shops.
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6. To fix ratio between the national currency and various local monetary units. Revenue-collecting offices to receive national currency only and local moneys according to the ratio, so as to extend the use of national currency and its equivalent, viz., bank- notes, throughout the country.
7. To call in old subsidiary coins according to market value.
8. To maintain at par the value of the Central Bank notes in circulation in Peking
by the sale of foreign gold drafts.
9. To buy gold with the seigniorage profit, and place same in foreign countries to cover eventual deficiency in the gold reserve abroad.
10. To raise an internal loan against the gold reserve abroad to meet the require- ments of redemption of provincial depreciated papers.
[This Document is the Property of His Britannic Majesty's Government.
CHINESE LOANS AND CONCESSIONS.
CONFIDENTIAL
[230008]
No. 1.
Foreign Office to Treasury.
(Confidential.)
Sir,
168
[December 8.]
SECTION 1.
:
Foreign Office, December 8. 1917. WITH reference to the letter of the 30th ultimo from this department concerning the negotiations at Peking for the projected issue by the International Consortium of Banks of a Second Reorganisation Loan to the Chinese Government of 20,000,0001. for currency reform purposes, I am directed by the Secretary of State for Foreign Affairs to transmit herewith, for the information of the Lords Commissioners of the Treasury, copy of a note from the United States Ambassador announcing that his Government are contemplating the formation of an American group to participate in the loan.
The circumstances in which His Majesty's Government decided to authorise the British group to facilitate the negotiations for the conclusion of this loan in co-operation with the other groups concerned, ie, the French, Russian, and Japanese groups, are described in the enclosed copy of a letter of the 13th October from this department to to Sir C. Addis. The Japanese Government having suggested to His Majesty's Government, shortly after the proposal for a loan of 20,000,000l. had been made to the existing Consortium by the Chinese Minister of Finance, that the United States Government might be willing to reconsider their attitude towards political loans to China, and to advance half of the sum required, His Majesty's Ambassador in Washington was instructed by telegram of the 37th September to bring this suggestion to the notice of the State Department, and to say that His Majesty's Government would welcome the participation of an American group.
Before, however, any decision was reached by the United States Government the Chinese Minister of Finance approached the representatives of the British, French, Russian, and Japanese groups in Peking with a request for an immediate advance of 2,000,000l. on the projected loan for the purpose of restoring the value of the notes issued by the Bank of China, which had suffered a considerable depreciation. The Japanese group informed the other groups in the Corsortium that, in their opinion, this request of the Chinese Government should be acceded to, and they intimated that they were prepared to proceed alone if the consent of the other groups was not forthcoming. After consultation with the Japanese Government, His Majesty's Government, for the reasons stated in the memorandum addressed to the United States Embassy on the 8th ultimo, of which copy is enclosed, decided to advise the British group to instruct their representative at Peking to consent to the proposed advance.
It will be observed that the note received from the United States Ambassador states that, while the United States Government have decided to form an American group to participate in the loan, the group, being not yet organised, will not be in a position to participate in the proposed advance, and they therefore consider that it is highly important that the British group should do so. His Majesty's Government are urgently recommended to make the necessary arrangements to this end, and the note goes on to say that, should such participation by the British group be found practicable, the American group, when organised, might entertain a proposition to carry temporarily the British group's future participation in the loan.
The American proposal has been discussed with Sir C. Addis, the representative of the British group in the Consortium, who expressed the opinion that, as regards the advance, he could not advise the British group to take part in it unless the American group also participated. But if the American group, though willing to take part in it, were prevented only because they could not be constituted in time, he would be prepared to recommend the British group to provide not only their own share of the advance, but also temporarily the share of the American group. As regards the loan, he had already advised the British group that, if they took part in the advance, they made themselves responsible for the conclusion of the loan, though this did not necessarily oblige them to take part in the issue.
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