M
33
2.
arrangement. Difficulties caused by purely Chinese loans (which of course there are no means of preventing ) could probably be straightened out by the Chinese themselves, but any foreign and especially British participation in such loans would not only greatly increase the difficulties of the Chinese government but would seriously undermine the position which His Majesty's Government might wish to take up.
4.
The Nanking government would probably regard the transaction as a deliberate encouragement for our own selfish ends of the separatist tendencies recently manifested in Canton, and their hostility might adversely affect important British interests in other parts of China.
5.
I have no information es to how the Bank will obtain the surtax revenue for the purpose of paying the coupons, but it is obvious that any arrangement made for this purpose might have an important bearing on the wider issues involved in the question or tariff autonomy.
6. The objection that the loan is one that comes within the scope of the consortium agreement would probably be waived by the other banking groups who are parties to that agreement, but it is impossible to ignore the danger that this may be the first of a series of cash advances to be swallowed up by a large consolidation loan at some future date and I view with alarm the participation by important British interests in such dubious and dangerous methods of finance.
7