2
may soon see negotiations for both lines proceeding simultaneously. Whether the new Regulation, bringing all future loan negotiations under the direct control of the Board of Finance, will have the effect of transferring these negotiations from the hands of Chang Chih-tung it is at present difficult to say, but I doubt it. It might be a good thing for many reasons, as Chang is a most impracticable old man, but he is the trusted adviser of the Prince Regent, and his age, scholarship, and known integrity give him an immense influence in the present Government. He is probably in a position to override any Regulation.
Chang Chih-tung was to send Bland a Memorandum of his proposals, for which the latter is still waiting. An important question for us is that of the interest to be allowed in future on loan funds in London. No doubt the Chinese will have a hard fight for the 4 per cent. precedent created by the last two railway loans; but the rate is altogether excessive, particularly at the present time, and we shall have to do our best to resist it. The question may be one of the first to come up, so soon as negotiations really commence, and, in anticipation of this, I have thought it best to ascertain your views by wire.
Chinese Government Loan of 1908, 5,000,000Z--In flagrant breach of Article 10 of the Loan Agreement, the Yu-cbuan Pu have been offering for tender by all the foreign banks here the transfer to China of the balance of this loan, due on the 5th February next. I shall be writing fully to Shanghac on the subject, and will send you a copy of my letter.
In the meantime, after consulting with the Legation, who are prepared to give us all the necessary support, I have sent in an official protest, jointly with the Banque de l'Indo-Chine, to the Yu-chuan Pu. It is a piece of impudent bad faith, characteristic of Liang Shih-yi, and cannot, without jeopardy to all our other Loan Agreements with the Chinese, be allowed to pass. The balance of the loan proceeds, due on the 5th February, are, of course, pledged as security for our loan to the Chino-tung Bank of 3,000,000 taels; and I hope that, when the 5th February arrives, you will keep a tight hand on so much of the funds as may be necessary to secure the repayment of our advance.
Yours very truly,
(Signed) E. G. HILLIER.
[This Document is the Property of His Britannic Majesty's Government]
CHINA RAILWAYS.
CONFIDENTIAL
[3606]
C.O.
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RECO
[January 27.]
Rec 26 E Oy
SECTION 2.
No. 1.
Sir F. Bertie to Sir Edward Grey.-(Received January 27.)
(No. 21.) (Telegraphic.) P.
Paris, January 27, 1909. PLEASE see my telegram No. 19 of the 26th instant respecting the proposed loan to the Chinese Government for the Hankow-Canton Railway.
Mr. Addis has left Paris for Berlin, where his address is Hotel Bristol.
The French Government have informed him that, until an agreement has been come to between Great Britain, France, and Germany for sharing all similar loans in the future, they cannot consent to the participation of a German group, and M. Caillaux, the Minister of Finance, refuses to make an exception in this particular case.
He is, however, ready to open negotiations in regard to the question of future sharing.
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