[This Document is the Property of His Britannic Majesty's Government.]
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unreasonable conditions imposed by the foreign financial groups interested in China, in particular the demand for the hypothecation of revenues and the obligation to submit the accounts of Government railways for foreign audit and inspection, one cannot help suspecting that this resentment is in great measure due to less worthy motives, to a desire, in fact, on the part of those placed temporarily at the head of the great spending departments of State, accentuated by the increasing requirements of the Imperial Court, to obtain untrammeled control of the funds raised for railways or other productive enterprises. The present loan may indeed be regarded as a revolt on the part of the reactionary and less reputable elements in the Chinese Government against the tightening grip of foreign financiers on the nation's purse-strings, and if this be so, the negotiations now pending may mean the commencement of a struggle, the outcome of which may have far-reaching effects on the economic developinent of China.
I have, &c.
AFFAIRS OF CHINA.
CONFIDENTIAL.
[37789]
No. 1.
[October 17.]
SECTION E O
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REC
India Office to Foreign Office.--(Received October 17.)
REGE 11 NOV 10
THE Under-Secretary of State for India presents his compliments to the Under- Secretary of State for Foreign Affairs, and, by direction of Viscount Morley, forwards herewith, for the information of the Secretary of State, copy of a telegram from the Viceroy, dated the 16th October, 1910, relative to the Burmah-Chinese frontier.
India Office, October 17, 1910.
W. G. MAX MÜLLER
Enclosure in No. 1.
October 16, 1910.
Government of India to Viscount Morley. (Telegraphic.) P.
BURMAH-CHINA frontier. See your telegram dated the 22nd ultimo. I repeat the following telegrams received from Government of Burmah 1. Dated the 6th instant:
"Expedition north-east of Myitkyina district. See your letter dated the 12th September.
"The opinion was expressed by the Lieutenant-Governor, in my letter of the 14th June submitting memorandumi on military affairs in Yünnan by consul at Tengyueh, that there was unlikely to be an attack by regular troops on Hertz's escort if Chinese were forestalled. Captain Pritchard, of the Military Police, who returned recently from visits to Tongyueh, Talifu, and Yunnan-fu, where he inspected the Chinese troops, has now furnished later information. As soon as it is printed we will submit copy of Pritchard's report. Two thousand five hundred old troops, including some 1,000 near Tengyueh and the rest some distance off, are reported by him to be in the Tengyueh command. These men are armed with single-loading Mauser rifles, except about 500, who have magazine rifles. This is described by Pritchard as an effective fighting force, which, especially for work in the jungle, is of decided military value. There are also in Yunnan 8,822 new troops, 1,500 of whom are stationed at Talifu. These troops are described by Pritchard as excellent, being well equipped and well trained, and as anxious for an opportunity of displaying their prowess against foreigners. At Talifu there are only infantry, but at Yunnan-fu there are, besides maxim guns, nine batteries, each composed of six modern mountain guns. Pritchard was requested by the Viceroy of Yunnan personally to assure Lieutenant- Governor of Burmah that peace with Burmah was his desire; Viceroy added that, in order to keep order among unruly men on Burmah frontier, he intended to send new troops thither. Persistent rumours which Pritchard received, to the effect that after present rains new troops will be sent to Tengyuch from Talifu, are thus confirmed. Pritchard was also informed by Chinese general that protection of Burmah frontier is the object of new troops at Talifu. In addition to information furnished by Captain Pritchard, consul at Tengyueh reports that a large scale map is being printed at Tongyueh showing the unadministered tract north-east of Myitkyina. While hoping that Hertz's escort will not be attacked by Chinese, the possibility, especially if new troops are sent to Tengyueh from Talifu, cannot be disregarded by Lieutenant- Governor. That the expedition will be a surprise his Honour cannot believe. Our intention, according to consul at Tengyueh, is the talk of Tengyueh bazaars, Suspicion must in any case be aroused by large order of mules from China. Chinese would have ample time to interrupt, even if they did not know our intention until expedition. starts from Myitkyina. It is shown by report of Captain Pritchard that it is possible to collect effective force of regular troops at Tengyueh, and thence without difficulty to despatch them into unadministered tract on Hertz's flank as he marches to Pien-ma. If Hertz wore cut off or had to retire before superior force, we should incur serious loss of prestige. If the expedition were abandoned there would be an almost equally
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