hap 5.
2.
arrangement. Difficulties caused by purely Chinese
loans (which of course there are no means of preventing )
could probably be straightened out by the Chinese
themselves, but any foreign and especially British
participation in such loans would not only greatly
increase the difficulties of the Chinese government
but would seriously undermine the position which His
Majesty's Government might wish to take up.
4. The Nanking government would probably regard
the transaction as a deliberate encouragement for
our own selfish ends of the separatist tendencies
recently manifested in Canton, and their hostility
might adversely affect important British interests
in other parts of China.
5. I have no information as to how the Bank
will obtain the surtax revenue for the purpose of
paying the coupons, but it is obvious that any
arrangement mode for this purpose might have an
important bearing on the wider issues involved in the
question of tariff autonomy.
6. The objection that the loan is one that comes
within the scope of the consortium agreement would
probably be waived by the other banking groups who are
parties to that agreement, but it is impossible to
ignore the danger that this may be the first of a
series of cash advances to be swallowed up by a large
consolidation loan at some future date and I view with
alarm the participation by important British interests
in such dubious and dangerous methods of finance.
7
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