>
[This Document is the Property of His Britannic Majesty's Government, and should be returned to the Foreign Office if not required for official use.]
CHE AL
541
Cypher telegram to Sir R. Macleay,
(Peking)
Foreign Office, 20th February, 1926. 11.30.p.m.
No. 68.
Your telegrams Nos. 9 and 10.
1. have given the fullest consideration to your latest proposals and have carefully reviewed all your arguments in support of your policy and your criticisms of the proposals put forward from here in the recent interchange of telegrams.
2. You advocate that China's Customs revenues increased by the imposition of surtaxes and later by the grent of tariff autonomy should continue to be collected as now and remitted to Shanghai. There arrangements would be made for the safe custody of the funds in foreign and Chinese banks so that they can be used for the service of the present secured foreign and domestic obligations and of the present unsecured debt in accordance with a debt consolide- tion scheme the terms of which are to be incorporated in the treaty to be signed between China and the foreign powers. You also hope to secure the partial abolition of likin by means of a special surtax of which the proceeds will be divided among the provinces and you believe that the other powers
will