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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.]
To
CHINA.
Cypher telegram to Sir M. Lampson (Peking).
Foreign Office, June 29th 1928. 6.00 p.m.
No.157.
The Hongkong-Shanghai Bank state that a syndicate
consisting principally of E.D. Sassoon and Company
Limited and Sir Robert Ho Tung, are negotiating for an
issue of bonds for three million dollars by the Canton
government, which they will underwrite. The security
will be the 2% custons sur-tax and the loan will be
repaid by ten monthly instalments of capital and
interest. It is proposed that the branches of the
Bank in Hongkong and Canton should receive applications
for the bonds and coupons.
2. From the purely local point of view there
is probably much to be said for the proposed transaction
as tending to improve friendly relations between Hong-
kong and Canton, but owing to the wider political
issues involved I see serious objections to the
proposal for the following reasons.
3. His Majesty's Goverment may at any moment
find themselves engaged in negotiations with the Nationalist government on the subject of tariff autonomy The method of handling and disposing of the additional revenues would almost certainly be the crux of such
negotiations, but if the revenues had already been
pledged as security for local loans it would greatly diminish the chances of arriving at any satisfactory
arrangement