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The financial representatives are of opinion that the Yuchuanpu have exaggerated the danger of local trouble, with the view of obtaining easier terms, though, short of lending the money without any restrictions whatever, it would, they maintain, be Their difficult to frame terms less onerous than the Tien-tsin-Pukow terms. observations, they say, have led them to the impression that the opposition of Chinese public opinion to foreign loans in general bas of late considerably weakened.
How far the opinions of the bankers are justified it is difficult to judge. The action of the central Government, which formed the subject of our identic notes of protest of the 12th February and the 22nd April, has doubtless encouraged provincial opposition; and I am further informed that Tong Shao-yi, who is due in Peking to-morrow to take up his post as president of the Board of Communications, is at present strongly opposed to the employment of foreign capital for the construction of railways. It is probable that the central Government could, with some slight concessions on our part, put through the scheme, if they really wished to, without the risk of serious disturbances; but there would always be the danger of subsequent opposition in the provinces in the practical work of construction. It will probably require strong and united pressure on the part of the four Governments concerned to induce the Chinese Government to take such a step, and though the informal conversation of my French colleague has shown me that we are in complete accord, I am not so sure that we can reckon on the loyal and whole-hearted support of the American and German Legations. I have no reason to believe that the American Minister has changed his attitude since I wrote my despatch No. 226 of the 14th July, and it is even hinted that the American group may vent their spite for our refusal to support the Chinchow-Aigun Railway project by adopting a very lukewarm attitude in regard to the Tukuang Railway loan. The German Tegation--probably in view of the approaching visit of the Crown Prince-refuse at present to join in any action that might in the slightest degree hurt the susceptibilities of the Chinese, and are following a policy of conciliation at all costs.
The German Minister is returning to Peking in a few days, and we shall then have a meeting to discuss what action we should take, subject to the approval of our Governments. My private opinion, in which M. de Margerie and the four financial representatives concur, is that we should not allow the binding effect of the initialled agreement to be called in question, but that, subject to that proviso, we might invite the Chinese Government to state to us the modifications which they have in view, in order that we, with the approval of our respective Governments, may decide to what extent these may be entertained, and may then recommend them for adoption to the financial groups. The representatives of the groups would thereby be protected from being forced into a discussion of inacceptable terms, and might then proceed to negotiate with the Yuchuanpa upon an approved basis of compromise.
I have, &c.
Enclosure 1 in No. 1.
W. G. MAX MÜLLER.
Notes of an Interview with Yuchuanpu, October 3, 1910, at 4 P.M. Present: Shen Yun-pei, Acting President; Shông Kung-pao, Vice-President; and Messrs. Hillier, Menocal, Homberg and Cordes, Representatives of the four Groups.
HIS Excellency Shen explained that the board had received strong protests from the provincial gentry, principally of Hupei and Hunan, against the conclusion of the loan agreement negotiated with Grand Secretary Chang, on the ground that it affected sovereign rights and was based on Tien-tsin-Pukow terms. Their reason for the latter objection was that Tien-tsin-Pukow terms were the outcome of negotiations based upon a preliminary agreement which had been previously concluded, while, in the present instance, the line (or one of them) which formed the subject of negotiation had been redeemed from the previous concessionnaires and therefore the field was open for negotiations upon an entirely new basis which they expected would be better than Tien-tsin-Pukow terms. We pointed out that the present agreement was an adaptation of Tien-tsin-Pukow terms from beginning to end, by the special request of the late Grand Secretary Chang, who had insisted throughout upon strict adherence to them.
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The presidents replied that in this the Grand Secretary Chang had acted wrongly and against the wishes of the people. The present object was to so modify the terms of the agreement as to satisfy the objections of the gentry.
We pointed out that his Excellency Chang was Imperial Commissioner, appointed by special edict with full powers to negotiate the loan. Tien-tsin-Pukow terms had been proposed by him, not by the foreign banks. The terms were concluded after months of negotiation in a final agreement, the text of which was initialled by the contracting parties as binding and only awaiting the formality of ratification.
The presidents objected that the text could not be considered final since it admittedly had to await ratification both by the Board of Finance and by the Throne, as was shown by a note added to the Chinese text at the time of initialling. They also objected that his Excellency Chang had not signed the text himself, but had deputed signature to the two deputy negotiators.
We pointed out that these deputies signed at the request and in the presence of his Excellency Chang himself, a procedure frequently followed where the Imperial Commissioner is of high rank. The instance was cited of the 1905 Auglo-German loan for 1,000,000, the final agreement for which was signed not by the negotiator, the president of the Board of Finance, but by his deputy in his presence. The delay in ratification of the loan agreement initialled on the 6th June, 1909, had been due solely to the formulating of an American claimfor participation for which, at the request of the Wai-wu.Pu, provision had to be made, and later to the death of his Excellency Chang himself,
The presidents interposed by stating that the delay in ratification was due also to another cause, namely, that bis Excellency Chang, influenced by representations from the provinces, had abandoned his intention to apply for ratification of the agreement negotiated.
We said that, with our knowledge of the circumstances and of the attitude of the late Grand Secretary Chang, we could not accept that statement. In the opinions of ourselves and of our Governments the initialled text of the 6th June, 1909, was final and binding, and the process of ratification was a mere formality. A case had never been known in our experiences, or in that of the presidents themselves, where an agreement so initialled by plenipotentiaries had been subjected to alteration. They (the presidents) were now asking us to change the whole basis of the agreement, which was Tien-tsin-Pukow terms, and to negotiate something fresh in order to satisfy the objections of the provincial gentry. We could not discuss such a proposal without applying to our respective legations for new instructions.
The presidents recognised the propriety of this course and expressed the hope that a compromise could be arrived at which would remove both the difficulties of the board and the objections of the gentry, and thus smooth the way for future and more lucrative business for the groups.
We said that, so soon as we had received instructions from our legations, we would ask for another interview. The presidents replied that they would always be at our disposal whenever required.
Peking, October 3, 1910.
C. HOMBERG,
H. CORDES,
E. G. HILLIER,
(For W. Straight),
D. MENOCAL,
Representatives of British, French, German,
and American Groups.
Enclosure 2 in No. 1.
Copy of a Note added to the Chinese Text of the Hukuang Railways Loan Agreement at the time of the initialling by the Contracting Parties.
AS regards the terms of this agreement and the supplementary letter, deputies have now been appointed to arrange the loan and to bring matters to a conclusion with the representatives of the banks. They have accordingly reported to the director-general and obtained his approval whereby they have been appointed to sign the agreement provisionally.
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