CO129-383 - Public Offices - 1911 — Page 514

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

[B]

10697

AFFAIRS OF CHINA.

REC? REG 16 JUN 11

CONFIDENTIAL.

[May 31.]

SECTION 1.

[21046]

No. 1.

Dear Sir Francis,

Mr. Addis to Foreign Office.-(Received May 31)

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31, Lombard Street, London, May 30, 1911. IT is not quite clear from M. Simon's letter whether the Russian "menace refers to was a written or an oral communication. him in general terms that, in my opinion, the best policy with Russia, as with Japan, I have therefore merely replied to is to take them into our confidence as we go along. If we did that there should be no difficulty in satisfying them that no step will be taken with regard to the expenditure contemplated by the Currency Loan Agreement without an opportunity being afforded them of considering whether or no it is in conflict with their interests in Manchuria.

With regard to the allegation that the pledging of certain Manchurian revenue as a security for the loan forms part of a general policy which might be considered unfriendly to Russia, I have pointed out to M. Simon that it should not be difficult to show that such a policy, even if intended by China, could have no force so far as Europe is concerned unless the groups were to allow themselves to be made the instruments of such a policy. The presence of the British and French groups in the international combination should be a sufficient guarantee to Russia, as to Japan, against the danger of any such unfriendly policy being made effective.

In expressing these views to M. Simon, I have told him that I cannot help feeling that, frankly expressed, they should satisfy our allies that the British and French groups have no intention of allowing themselves to be associated with any policy which might justly be considered inimical to the interests of Russia and Japan.

Since writing I have received your letter of the 29th instant.

In reply to your questions, Mr. Straight telegraphed on the 13th May that the statement of expenditure for the balance of the preliminary advance of 1,000,000l. wag expected "about two months from that date," that is to say, about the middle of July.

With regard to your second question as to the total amount of loan proceeds allotted to Manchuria, it is stipulated in article 8, paragraph (e), that "a statement specifying the nature of the proposed enterprises in Manchuria, and showing in what amounts the allotted portion of the proceeds of this loan is to be applied thereto shall be handed to the banks on the date of the signature of this agreement." have not actually heard that this is the case, but, in the absence of information to the contrary, I assume that the statement referred to will accompany the loan agreement, which was posted from Peking on the 23rd May, and may therefore be expected here on the 5th or 6th June.

We

I note your suggestion that the group; should intimate to the Chinese the expediency at the present juncture of excluding railway enterprises in Manchuria from those contemplated under the agreement, and I shall take an opportunity of consulting the continental delegatos on this point at our next conference in London on the 12th and 13th June. In the meantime, the statement I have made to M. Simon, which I trust is in accordance with your views as to the proper attitude to be assumed by the British group in this matter, may be held to cover the ground.

Yours truly,

[2023 hh-1]

C. S. ADDIS.

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