CO129-373 - Public Offices - 1910 — Page 63

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[This Document is the Property of His Britannic Majesty's Government.]

AFFAIRS OF CHINA.

CONFIDENTIAL.

[August 12.120647

SECTION

RECO Kres 16 SEP 10)

[29321]

No. 1.3

Dear Mr. Greg,

Mr. C. S. Addis to Mr. Greg.-(Received August 12.)

Hong Kong and Shanghai Banking Corporation,

31, Lombard Street, London, August 11, 1910. I ENCLOSE an extract from Hillier's last letter, in which he refers to the terms of the Chinchou-Aigun loan, which, it appears, are not supported by the Imperial guarantee.

It is a sad reflection upon American methods that this should be brought to our notice when the ink is scarcely dry upon the letter addressed to us, in which they state "that they do not care to entertain a proposition for any Chinese provincial loan unless bearing an unconditional Imperial guarantee, and believe it would be prejudicial to the interests of all concerned to have other groups entertain provincial loans unless so secured."

It may be of interest to you to glance at the last reports of the Canton-Kowloon Railway, which please do not trouble to return. Upon the whole, I think we may say that satisfactory progress is being made, and so far we have no reason to doubt the correctness of Grove's anticipation, that through connection with Kowloon should be established on or about July 1911.

Yours truly,

C. S. ADDIS.

Enclosure in No. 1.

Mr. Hillier, Peking, to Mr. Hunter, Shanghai.

July 26, 1910. (Extract.)

Manchurian Loan.-When I last wrote I was contemplating a run up to Mukden, to tackle the Viceroy direct. My friend Mr. Lu Tien-ch'h has strongly dissuaded me from taking any such step, since he feels sure that it would be misinterpreted as an expression of anxiety on our part, of which the Viceroy's subordinates would take full advantage to our detriment. I feel sure this is sound advice, and I have therefore decided not to go. The only course now is to preserve a dignified silence and wait. In the meantime, the Viceroy's deputy has written to Mr. Lu, stating that he sees no hope of the business going through unless we are prepared to accept Chinchou-Aigun terms, which, he states specifically, do not carry an Imperial guarantee. This is interesting, as setting at rest a point on which I have always been in doubt. I have replied that, as I have never seen the Chinchou-Aigun terms, it is obviously impossible for me to discuss them; if he will let me have a copy of the agreement, I shall be glad to tell him how far we would be prepared to adopt its terms. I now hear from a very well-informed source that, some weeks ago, the specie bank lent the Viceroy a sum of 500,000 dollars and later a further sum of 1,500,000 dollars. On learning this the Russian Minister here, M. Korostovetz, called on Mr. Ijouin, the Japanese Minister, and pointed out to him that, in order to conform to the spirit of the new Russo- Japanese treaty, such operations should be on joint account, and the result has been an agreement, signed last week, between the specie and Russian banks, providing for co-operation in all future Manchurian business of the same nature. If this is the case, it shows how completely the political net is now being drawn round the country by the two dexterous partners, and one can hardly credit the reckless folly of the Viceroy, who surrenders himself to such an obvious bait when money is to be had on fair terms from neutral lenders. At the present moment there could be no legitimate objection to the Viceroy borrowing from us, and I feel sure we could rely upon the support of our Governments were the question raised by Russia and Japan; once the

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