[This Document is the Property of His Britannic Majesty's Government.]
CHINESE LOANS AND CONCESSIONS.
CONFIDENTIAL
[235377]
No. 1.
182
[December 17.]
SECTION 1.
Sir,
Foreign Office to Treasury.
Foreign Office, December 17, 1917. WITH reference to the urgent and confidential letter from this Department of the 8th instant concerning the projected second Chinese Reorganisation Loan and the proposed advance to be made on that loan, I am directed by the Secretary of State for Foreign Affairs to transinit, for the information of the "Lords Commissioners of His Majesty's Treasury, copy of a letter and its enclosure from Sir C. Addia, the representative of the British group in the international consortium.
I am to invite attention to the final paragraph of the resolution adopted at the meeting of the representatives of the banks composing the British group held to discuss the question of their participation in the proposed advance, which runs as follows:-
The participation of the British group would be conditional upon the sanction of His Majesty's Treasury having been obtained for the immediate advance for the supplementary Chinese Reorganisation Loan, and for permission to issue and deal in the relative Chinese Treasury bills and loan bonds.'
In the letter of the 8th December the sanction of the Lords Commissioners was requested only for the issue of the capital required by the British group to provide for their participation in the advance, it being understood that, while the fact of such participation in the advance would make the British group morally responsible for the conclusion of the loan, it did not necessarily oblige them to take part in the issue.
The British group, however, appear to consider that the fact of their participating in the advance may in certain circumstances involve a contingent liability to participate directly in the issue of the loan. This liability, however, would only arise in the event of the Japanese group and/or of the American group declining to issue the shares of the British group under the terms of article 4 of the Sextuple Group Agreement of the 18th June, 1912, of which a copy is enclosed.
Mr. Balfour accordingly directs me to request you to submit this fresh point to the Lords Commissioners and to invite them to consent not only to the British group participating in the proposed advance in the manner described in the letter of the 8th instant, but also to their accepting the above-mentioned contingent liability in respect to their eventual participation in the projected issue of a supplementary Chinese Reorganisation Lean.
I am, &c.
W. LANGLEY.
[2752 r—1]
1