CO129-510-10 Financial loan from Hong Kong government to Canton Provincial government 3-4-1928 - 3-8-1928 — Page 45

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This Document is the Property of His Britannic Majesty's Government, and should be

returned to the Foreign Office If not required for official use.]

To

CHINA.

Cypher telegram to Sir M. Lampson (Peking).

Foreign Office, June 29th 1928. 6.00 p.m.

No.157.

The Hongkong-Shanghai Bank state that a syndicate

consisting principally of E.D. Sassoon and Company

Limited and Sir Robert Ho Tung, are negotiating for an

issue of bonds for three million dollars by the Canton

government, which they will underwrite. The security

will be the 2% custons sur-tax and the loan will be

repaid by ten monthly instalments of capital and

interest. It is proposed that the branches of the

Bank in Hongkong and Canton should receive applications

for the bonds and coupons.

2. From the purely local point of view there

is probably much to be said for the proposed transaction

as tending to improve friendly relations between Hong-

kong and Canton, but owing to the wider political

issues involved I see serious objections to the

proposal for the following reasons.

3. His Majesty's Goverment may at any moment

find themselves engaged in negotiations with the Nationalist government on the subject of tariff autonomy The method of handling and disposing of the additional revenues would almost certainly be the crux of such

negotiations, but if the revenues had already been

pledged as security for local loans it would greatly diminish the chances of arriving at any satisfactory

arrangement