CO129-451 - Public Offices - 1918 — Page 164

[This Document is the Property of His Britannic Majesty's Government.j161

CHINESE LOANS AND CONCESSIONS,

CONFIDENTIAL.

[October 20.]

SECTION 3.

[201739]

No. 1.

Mr. Alston to Mr. Balfour. (Received October 20.)

(No. 276. Confidential.) Sir,

Peking, August 27, 1917. I HAVE the honour to report that at the beginning of this month the Chinese Government approached the foreign representatives with a view to obtaining the release of 2,000,000 taels from the surpins Customs Revenue deposited with the custodian banks on account of its urgent requirements.

Enquiry from the Inspector-General of Customs showed that the estimated surplus from customs receipts, after meeting all obligations due on account of indemnity and loats, would amount on the 31st December next to over 8,000,000 taols. A copy

of this statement of estimate is enclosed herewith. This sbows that, even allowing for a fall in the present high rate of silver, the foreign loan and indemnity service is amply secured, without having recourse to the revenues of the S.lt Gabelle. Under these circumstances, the Diplomatic Body could have no objection to the release of the 2,000,000 tuels asked for, and a note to this effect was addressed the dean to the Wai-chiao Pu on the 20ch instant.

After the note had been sent off the Italian Minister discovered that the statement enclos d in this despatch hai not been communicated to him, as he had requested, by the doyen before the answer was given to the Chinese Government, and on his representations M. Berlaerts was obliged to inform the Wai-chiao Pu that the assent of the Diplomatic Body must be considered cancelled. Baron Aliutti pettishly considered himself piqued by what he regarded as an intentional slight on the part of the doven, and refused his sanction to the release unless the Chinese Government's debts due to his nations were first repaid out of the funds. As one of those debts were secured on Customs Revenue, Baron Aliotti had no real ground for making this condition. The matter was brought up at a full meeting of the Diplomatic B dy on the 24th instant, and I pointed out to iny Italian colleague the extreine undesirability of adopting such a narrow policy on meeting the first request made to us by the Chinese Government after their declaration of war against our enemies, a request, moreover, which we had no right to refuse. The majority of my colleagues supported me in this view, but Barn Aliotti dil not see fit to change his attit de.

As a matter of fact the Hong Kong and Shanghai Bank has already begun to hand over a portion of the money on the strength of the authority given by the Diplomitic Body. The arrangement come to provided for the release to be spread over four instalmenta of 500,000 dollars within a week or two.

The Japanese Minister suggested as a way out of the impasse that the Italian Miniser should come to an understanding with the Wai-chiao Pu that if the latter would recognise in principle the validity of the Italian claims he would withdraw is objection to the present release of the Customs funds. Barn Aliotti said he would endeavour to do so.

At a dinner given by the Minister for Foreign Affairs to the Diplomatic Body that same evening, Baron Ali tti explained to me confi lentially that he had felt constrained to take the step to which I had objecte l at the meeting as it had come to his knowledge that the Chine e Government had grown accustomed to think that they could ignore any claims or representations from the Italian Legation, as they considered that the latter had no means of enforcing any threats, and he wi-bel to show them that he was not going to allow himself to be treated with impunity, and the orcasions for doing so were so few that he had no alternative but to seize them when he could. He added that he was going to take the opportunity of endeavouring at the same time to obtain "rectification" of the boundary of the Italian concession at Tien-tsin by means of a ight addition to it, to be seg med trom the adjoining Austrian concession, now in the hands of the Chinese authorities, so as to protect it from insunitary contact with the adjacent Chinese town. I contented myself with observing that, however necessary and desirable it might be to obtain this rectification," I regretted that he should select the present occasion for endeavouring to do so.

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