2
impossible to accomplish that purpose unless the advance loan of 2,000,0001, now applied for by China, is brought into existence.
Not only so, the pourparlers for the present advance loan were in the first instance addressed by China to Japan; but as it was believed that a loan having for its object the adjustment of the Bank of China, as being une included in the Second Reorganisation Loan for which the Chinese Government some time since applied to the Four-Power Consortium, should properly be furnished by the Four-Power Consortium, it was suggested to China that it would be preferable that the Chinese Government should address to that consortium a fresh proposal for the loan as an advance on the Second Reorganisation Loan, and as a result we have now witnessed the present formal application to the Four-Power Consortium.
In view not only of the fact that, as above indicated, the adjustment of the notes of the Bank of Chira is an urgent question which admits of not a moment's neglect, but also having regard to the existence, so far as the Imperial Government are concerned, of a special connection such as that before mentioned vis-a-vis of the Chinese Government, the conclusion of the present advance loan is earnestly desired. It is therefore hoped that the British Government, upon further reconsideration of the foregoing circumstances, will signify their concurrence of the views of the Japanese Government, and give instructions to the British group so that the Four-Power Consortium may accede to the above application.
November 3, 1917.
[This Document is the Property of His Britannic Majesty's Government.]
CHINESE LOANS AND CONCESSIONS.
CONFIDENTIAL.
[732]
No. 764)
No. 1.
[January 1, 1918.]
SECTION 1.
Sir C. Greene to Mr. Balfour-(Received January 1, 1918.)
Sir,
Tokyo, November 7, 1917. WITH reference to my telegram No. 644 of the 4th instant, I have the honour to transmit to you herewith translation of a memorandum dated the 3rd instant, which I have received from the Minister for Foreign Affairs, conveying the reply of the Imperial Government to the enquiries which I had addressed to his Excellency, by your instructions, on the 29th ultimo, as to the desirability or necessity of complying with the request of the Chinese Minister of Finance for an advance of 2,000,000l. out of the projected loan for currency reform in China.
In addition to the considerations set out in the accompanying memorandum I may mention that Viscount Motono has informed me verbally that he believes it will be desirable to meet the wishes of the Chinese Government on political grounds as well, inasmuch as the solidity of the Cabinet, and a working understanding between the three groups of which it is composed, and which consist of the followers of the Prime Minister, the Minister of Communications, and the Minister of Finance, depend upon financial assistance being forthcoming now, and not merely on the conclusion of the negotiations for the Currency Lean itself, which are likely to be protracted.
I have, &c.
CONYNGHAM GREENE.
A
Enclosure in No. 1.
Memorandum communicated to Sir G. Greene by Viscount Motono, November 3, 1917.
THE Imperial Government have given careful consideration to the views of His Britannic Majesty's Government set forth in the memorandum of his Excellency the British Ambassador, dated the 29th ultimo, relative to the subject of an application which the Chinese Government have now made to the Four Powers Bankers' Consortium for an advance of 2,000,000l. on the Second Reorganisation Loan, having for its object the adjustment of the notes of the Bank of China (Chungkuo Bank),
The Imperial Government for their part also are at one with the view of His Britannic Majesty's Government that the Chinese Government will realise a favourable financial situation by the production recently and in the near future of a certain increase of revenue for reasons such as those noted under the various headings in his Excellency's memorandum; but the surplus of the salt tax, seeing that it has already for two or three years past in succession been handed over to the Chinese Government, does not constitute a specially new receipt, and, moreover, the apprehension is not wanting that in view of the present political situation the receipts therefrom may rather exhibit a certain decrease. Further, neither the suspension of the payment of the Boxer affair indemnity, vis-à-vis of the Allies, nor the raising of the tariff bas yet reached the stage of the determination of the date of enforcement. Therefore it cannot be supposed that the increase in revenue will attain to so considerable an amount as His Britannic Majesty's Goverument imagine. Again, as such increased revenue receipts will be directed to meeting various administrative expenses of that now hard-pressed country, one cannot but doubt whether any room remains for their On the other hand, disbursement upon the adjustment of the Bank of China's notes. however, the value of the notes of the Bank of China has of late fallen to an extraordinary degree, and with the consequent dulness of trade it naturally goes without saying that the losses sustained by merchants, native and foreign, are abnormal. In view of this it is a work of pressing urgency in the interest of that country's finances to place the Bank of China on a stable foundation, by the adjustment of the notes issued by that bank and the rehabilitation of their market value. That being so, the Imperial Government believe that at this juncture it will be absolutely
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