2
34,8012. 108. payable on the 5th of each month on account of the 41 per cent. Loan of 1695, and 40,2892 108. payable on the 20th of each month on account of the 5 per cent. Loan of 1896.
From the 14th March to the 14th August, the date of declaration of war against Germany, the equivalent of these sums in silver at the rate of the day was duly handed to the Deutsch-Asiatische Bank at Shanghai from loan service balances in the lauds of the Inspector-General of Customs.
On the outbreak of war the Chinese Government suspended payment of the German share of Anglo-German loan instalments, and the question arose as to what should be done with the sums hitherto payable and paid, pending resumption of loan payments to Germany after peace is declared.
It should be noted here that the Chinese Government's policy in regard to Anglo-German loans has not been altogether consistent. Thus China suspended payment of the German share of the Tien-tsin-Pukow Railway Loan on rupture of diplomatic relations, and almost immediately a question arose with the Hong Kong and Shanghai Bauk regarding repayinent of advances made by the bank to meet coupons of the above loan presented by British and other non-enemy bond-holders who were in possession of bearer-bonds issued by the German Bank when the loan was first floated.
Knowing that a similar question would arise on declaration of war and suspension of payment of the German share of customs-secured Anglo-German loans, and with a view to having available funds for resumption in due time of payment to German bond-holders, the Inspector-General of Customs suggested to the Chinese Government that it would be well to take advantage of the high rate of exchange and to settle the German portion of the loans as usual on due dates-settlement of exchange to be made with the Hong Kong and Shanghai Bank simultaneously with the British portions and the German instalments to be remitted to London and held in gold in an account to be opened by the Inspector-General. From funds so remitted arrangements should be made with the Hong Kong and Shanghai Bank to meet coupons and/or drawn bonds presented by British and non-enemy holders, and the balance not so required should be placed on deposit with the bank, drawing interest at 5 per cent. per annum.
After some difficulty the Minister of Finance was prevailed upon to sanction the above proposal, and to forgo the handling in silver of the funds released by the war declaration, but, with a view to improving China's credit on the London market, and at the same time to obtaining a more remunerative investment, he decided to invest the balance of the monthly sums remitted in certain Chinese Government gold securities, of which a list has been drawn up and communicated to the Inspector-General, Meanwhile, pending settlement of this question, the German loan instalments payable to the 20th August and 5th September, 1917, were held in abeyance. A decision having been reached previous to the payment due on the 20th September, instructions were given to settle the above two instalments when settling the British portion of the 1896 loan due on that date, together with the German portion of the same loan. instalments, amounting to 115,2807. 10s., were duly remitted and have been placed to the credit of a German loan instalment account, opened in the Inspector-General's name, with the Hong Kong and Shanghai Bank, London.
The three
In pursuance of the policy laid down by the Minister of Finance, the Inspector- General has instructed the bank to purchase Chinese securities to the face value of 90,0001, leaving a balance in the account which it is considered will be ample to meet the bank's advances on account of coupons and/or drawn bonds already presented by non- enemy holders.
The steady purchase of Chinese Government securities to the full extent of the available balances of the funds remitted each month from Shanghai will be pursued until further orders, and it is probable that this will amount to about 50,0001. a month.
F. AGLEN,
Peking, September 24, 1917.
Inspector-General.
[This Document is the Property of His Britannic Majesty's Government.]
CHINESE LOANS AND CONCESSIONS.
CONFIDENTIAL.
[732]
No. 764.) Sir,
No. 1.
[January 1, 1918.7
SECTION 1
Sir C. Greene to Mr. Balfour.-(Received January 1, 1918.)
Tokyo, November 7, 1917. WITI reference to my telegram No. 644 of the 4th instant, I have the honour to transmit to you herewith translation of a memorandum dated the 3rd instant, which I have received from the Minister for Foreign Affairs, conveying the reply of the Imperial Government to the enquiries which I had addressed to his Excellency, by your instructions, on the 29th ultimo, as to the desirability or necessity of complying with the request of the Chinese Minister of Finance for an advance of 2,000,000 out of the projected loan for currency reform in China.
In addition to the considerations set out in the accompanying memorandum I may mention that Viscount Motono has informed me verbally that he believes it will be desirable to meet the wishes of the Chinese Government on political grounds as well, inasmuch as the solidity of the Cabinet, and a working understanding between the three groups of which it is composed, and which consist of the followers of the Prime Minister, the Minister of Communications, and the Minister of Finance, depend upon financial assistance being forthcoming now, and not merely on the conclusion of the negotiations for the Currency Loan itself, which are likely to be protracted.
I have, &c.
CONYNGHAM GREENE.
Enclosure in No. 1.
Memorandum communicated to Sir C. Greene by Viscount Motono, November 3, 1917.
THE Imperial Government have given careful consideration to the views of His Britannic Majesty's Government set forth in the memorandum of his Excellency the British Ambassador, dated the 29th ultimo, relative to the subject of an application which the Chinese Government have now made to the Four Powers Bankers' Consortium for an advance of 2,000,0001, on the Second Reorganisation Loan, having for its object the adjustment of the notes of the Bank of China (Chungkuo Bank).
The Imperial Government for their part also are at one with the view of His Britannic Majesty's Covernment that the Chinese Government will realise a favourable financial situation by the production recently and in the near future of a certain increase of revenue for reasons such as those noted under the various headings in his Excellency's memorandum; but the surplus of the salt tax, seeing that it has already for two or three years past in succession been handed over to the Chinese Government, does not constitute a specially new receipt, and, moreover, the apprehension is not wanting that in view of the present political situation the receipts therefrom may rather exhibit a certain decrease. Further, neither the suspension of the payment of the Boxer affair indemnity, vis-à-vis of the Allies, nor the raising of the tariff has yet reached the stage of the determination of the date of enforcement. Therefore it cannot be supposed that the increase in revenue will attain to so considerable an amount as His Britannic Majesty's Government imagine. Again, as such increased revenue receipts will be directed to meeting various administrative expenses of that now hard-pressed country, one cannot but doubt whether any room remains for their On the other hand, disbursement upon the adjustment of the Bank of China's notes. however, the value of the notes of the Bank of China has of late fallen to an extraordinary degree, and with the consequent dulness of trade it naturally gues without saying that the losses sustained by merchants, native and foreign, are abnormal. In view of this it is a work of pressing urgency in the interest of that country's finances to place the Bank of China on a stable foundation, by the adjustment of the notes issued by that bank and the rehabilitation of their market value. That bring so, the Imperial Government believe that at this juncture it will be absolutely
[2764 -1
-1]
201
ד