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[This Document is the Property of His Britannic Majesty's Government.]
CHINESE LOANS AND CONCESSIONS.
CONFIDENTIAL.
198
¡December 20.7
SECTION 4.
[245233]
No. 1.
Sir J. Jordan to Mr. Balfour.-(Received December 29.)
(No. 350.) Šir,
Peking, November 3, 1918. THE declaration of war by China against the Central Powers and the consequent suspension of indemnity and loan payments have led to certain financial adjustments which it may be advisable to place on record.
•
The Boxer indemnity payable to Germany, which amounts to about 732,810. a year, was suspended on the rupture of diplomatic relations on the 14th March last, and I understand, been placed at the disposal of the Iuspector-General of Customs to meet the services of certain internal national loans on which the Ceutral Government had defaulted. Mr. Aglen was associated with two of these loans of 24,000,000 dollars each, and as the use of his name had doubtless influencod the subscribers, he felt sume responsibility for seeing that the Government kept faith with these and eventually succeeded in securing the German and Austrian share of the indemnity money for this purpose.
On the rupture of diplomatic relations, China also suspended payment of the German share of the Tien-tsin-Pukow Railway Loan, but with characteristic inconsistency continued the payment of the German share of the Hu-kuang Railway Loan and of the Anglo-German loans of 1896 and 1898 until the outbreak of war on the 14th August last, since which date no payments of any kind have been made.
The
From the enclosed memorandum which was forwarded to Mr. Alston by the Inspector-General of Customs, it will be seen that arrangements have been made for remitting the payments due to Germany on account of the 1896 and 1898 loans to the Hong Kong and Shanghai Bank in London, who are instructed to devote the proceeds to the purchase of Chinese securities on behalf of the Chinese Government. amount set free for this purpose is estimated at about 50,000l. a month, after deducting a sum of, say, 100,0001. a year which is required to meet coupons or drawn bonds of the two loans presented by British and non-enemy holders. The arrangement, it is significant to note, purports to be made with a view to having available funds for resumption in due time of payment to German bond-holders. "In other words, the Chinese Government, in making use of this money, ignores the debts due to the subjects of Allied and friendly Powers in order to provide for the eventual payment of enemy nations, but I presume that during war payment of loans of this kind is only suspended and not actually extinguished. It is remarkable, however, that no similar arrangement has been made for safeguarding the interests of German holders of railway loans, and it may be presumed that, if left to themselves, the Chinese would probably have treated all their future obligations to Germany with equal indifference.
As to the Reorganisation Loan, the German share of which amounts to 250,000%. a year, Sir R. Dane proposed to remit the money to London and place it in deposit with the Hong Kong and Shanghai Bank. The other banks, however, demurred to this proposal as being unduly favourable to the British Bank, and no arrangement has, I understand, been so far made for the disposal of the money, which remaine for the present in the receiving banks in Shanghai,
I have, &c.
J. N. JORDAN.
Enclosure in No. 1.
Memorandum by Mr. Aglen,
ON rupture of diplomatic relations with Germany on the 14th March last, the Chinese Government suspended payment of the Boxer indemnity payable to Germany, but continued payment of the German share of the Anglo-German loana secured on the Maritime Customs revenue. These instalments are two in number, namely:
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