CO129-382 - Public Offices - 1911 — Page 269

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Finance, yesterday and discussed the whole question with him. He told him quite plainly that America was not prepared to "dump down 50,000,000 dollars in China to It was in the interests of all countries, as be spent exactly as the Chinese pleased." well as in those of China herself, that her finances should be put on a proper footing. Tsai Tse, who was apparently prompted by Dr. Chen, said he thought the appointment of an American adviser would give rise to international jealousy, and added that he had given an assurance to the Senate that no such appointment would be made. adviser might be attached to the Taching Bank, but as he would apparently be subordinate to Dr. Chen it is out of the question that this proposal can be seriously entertained. It should be mentioned that Dr. Chen is the author of the recent proposals for currency reform, and he is evidently not anxious to have any foreigner associated with him on equal terms in carrying through these measures. The question has therefore reached a temporary deadlock, although Dr. Calhoun does not despair of arriving at an eventual solution. He foresees, however, that the negotiations are likely to be protracted, and that there will be no little difficulty in inducing the Chinese to accept an adviser invested with the necessary authority to superintend the expenditure.

Apart from the unwillingness of the Chinese to come to terms, it appears that the American group is encountering difficulties similar to those experienced by the A rival group, Speyer and Co., British and Chinese Corporation in the past.

represented by a Mr. Bash, is making offers to the Chinese on easy terms, not with a view to genuine business, but with the object of forcing the official group to give Speyer and Co. participation.

I had the honour of informing you briefly in my telegram No. 201 to-day of the deadlock reached in the negotiations.

I should add that Mr. Straight has expressed the wish that the enclosed memorandum of the meeting should be treated as entirely informal, as he did not intend that his statements should be recorded as official.

I have, &c.

J. N. JORDAN.

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With regard to the proposed currency loan, the chief opposition encountered by Mr. Straight from the Chinese was upon the questions of control of expenditure and joint signature. The Chinese feared any form on international control which might result in a state of financial tutelage similar to Egypt. Hence their objection to joint signature, since this might imply that each signatory would have the right to nominate a financial adviser. The Chinese, Mr. Straight said, were prepared to engage an American adviser, but objected to the powers conferred upon him by the agreement drafted in New York, which gave him full powers of veto in every detail of expenditure. Mr. Straight had proposed to the Chinese that, until the question of these advisory powers was settled, that of joint signature should be left in abeyance; and, in order to meet Chinese objections on all points, he had submitted to his group the following alternative proposals, which he had at the same time tentatively discussed with the Chinesc representative:-

1. A provisional agreement for 50,000,000 dollars gold to be signed forthwith between the American group and the Chinese, providing that within the next twelve months a definite scheme of currency reorganisation should be drawn up by the Chinese Government to the satisfaction of the American group, with the assistance of an American adviser to be immediately appointed.

2. For immediate Manchurian requirements, the American group to make advances to the Chinese Government against 6 per cent. Treasury bills to the extent of 5,000,000 dollars gold, the same to be repaid from the proceeds of the loan when issued, or otherwise, by the Chinese Government, it being stipulated that the objects on which the said advances are to be expended should not prejudice the ultimate issue of the loan bonds.

3. A currency scheme having been drawn up to the satisfaction of the American group, it will be submitted to the other groups, who will be invited to participation and joint signature of a supplementary agreement, which will be in the nature of a final agreement embodying the necessary conditions of control and participation.

Mr. Straight is awaiting the reply of his group to these proposals, and on receipt of same he will communicate it to the other representatives, who will be invited to discuss conditions at further meetings to be called by Mr. Hillier.

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Enclosure in No. 1.

Minutes of Meeting held at the Hong Kong and Shanghai Bank, Peking, December 13, 1910.

Present: Messrs. Hillier, Casenave, Saint Pierre, Mavers, Cordes, and Straight.

MR. HILLIER informed Mr. Straight of the origin and progress of the Kansu Railway loan negotiations, of the request of the Viceroy for a draft preliminary agreement, and of the circumstances under which he consulted Messrs. Cordes and Saint Pierre, of their reference to the European groups of the question whether, under the terms of the inter-group agreement and its accompanying reservations, they were called upon to consult with the American group, and of the reply now received from the European groups, copy of which was handed to Mr. Straight.

The draft preliminary agreement for the Kansu Railway loan was then handed to Mr. Straight to read, with the explanation that it was designed more to show the Viceroy the general lines upon which such an agreement would be drawn up, than to present him with a definite proposal. Mr. Straight was asked if he wished the name of the American group to appear in the agreement as participants. He replied that he would first like to submit the proposal to his New York group; but, on being told that time would not allow this to be done, he requested that the American name might be inserted in the draft.

Mr. Straight then said he wished to take the opportunity of informing the other representatives of the progress of his own negotiations with the Chinese.

As regards the Chinchou-Aigun Railway, no doubt the other representatives would be interested to have copies of the agreement, and these would be prepared and handed to them. He had the Viceroy's authority to admit the participation of the other groups. The alternative Russian proposals for a Chinchou-Hailar and Harbin- Aigun Railway he did not consider were to be taken seriously, and this impression was borne out by recent conversation with the Russian Minister here. Lord ffrench was leaving on the 19th instant for Europe in order to discuss alterations in the route which might satisfy Russian objections.