[This Document is the Property of His Britannic Majesty's Government.] 712
AFFAIRS OF CHINA.
CONFIDENTIAL.
[3069]
No. 1.
358
[January 26.]
SECTION 2.
(No. 15.) Sir,
Sir J. Jordan to Sir Edward Grey.—(Received January 26.)
Peking, January 10, 1911. IN continuation of my despatch No. 454, Confidential, of the 16th December last, and in confirmation of my telegram No. 7 of yesterday, I have the honour to report the substance of a further conversation which I have had with Mr. Calhoun on the subject of the proposed American loan.
Mr. Calhoun's remarks are, to some extent, a repetition of what he and Mr. Straight bad already told me, but they are perhaps worth reproducing as showing the sequence of events in the course of the negotiations.
Mr. Calhoun said that the first overture which was made to him came from Na-tung, who paid him a visit and intimated that the Chinese Government were anxious to procure a loan from America for the double purpose of currency reform and the furtherance of productive works in Manchuria. Na-tung gave him clearly to understand that there would be no objection to the employment of an adviser to control the expenditure of the loan funds.
Having obtained the approval of the American Government, Mr. Calhoun had an interview with Sheng Hsuan-huai, who also agreed to the acceptance of an adviser as a condition of the loan. In the interval which had elapsed between the two visits, the agent of the American Hawley-Macey group of financiers had proceeded to Mukden, and there negotiated with the Viceroy an agreement for a loan of 10,000,000 dollars gold, at 95 and 5 per cent., without security or conditions of any kind. In reply to a query which Mr. Calhoun put to Sheng, the latter stated that the transaction would not receive the Imperial approval, and that the loan for Manchuria would be included in the general loan of 50,000,000 dollars gold.
The matter then came before Duke Tsai-tse and the Board of Finance, and a new factor was introduced by Dr. Chen, the vice-president of the Ta Ching Bank, who acts as financial adviser to Duke Tsai-tsê. He at once raised objections to the employment of an adviser, and suggested that instead, the foreign expert should be assigned a subordinate position in the Ta Ch'ing Bank. Mr. Calhoun did not challenge this suggestion at the time, but he subsequently explained its untenable nature to Sheng Hsuan-huai, who confirmed his former assurance regarding the appointment of an adviser. Sheng soon afterwards dropped out of the negotiations, which reverted to the Ministry of Finance. Duke Tsé finally stated that he had given an undertaking to the members of the Senate to employ no foreign advisers.
Mr. Calhoun then approached Na-tung, and asked him to make good his original assurance. Na, as usual, said that the matter was no longer in his hands, but in those of the Minister of Finance.
Confronted by this conflict of opinion, Mr. Calhoun decided to present a written statement to the Minister of Finance, stipulating for the appointment of a financial adviser as an indispensable condition of the loan, and asking the Chinese Government for a categorical reply. He felt some doubt as to whether the financial adviser was expected to exercise any supervision over the portion of the loan which was to be used for Manchuria, and which is now put down at 15,000,000 dollars gold. He is now awaiting instructions on this point from Washington, and on their receipt he intends to bring the question to a definite issue.
The appointment of Sheng Hsuan-huai to the post of President of the Board of Communications gives, Mr. Calhoun thinks, some hope of a favourable reply, and should this forecast prove correct, he intends, first, to make a diplomatic agreement with China for the appointment of an adviser-preferably an American, and then to leave the negotiation of the details of the loan to the agent of the American group of financiers.
The next step will be for the American Legation to bring pressure to bear on the Chinese Government to induce them to assent to the joint signature of the agreement by all four banks. Mr. Calhoun considers it essential in the interests of China
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