May 7, 1896.]
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British Minister also recommended the Chinese to issue conjointly the fifty millions to be given to each. The Chinese themselves were anxious! to give the remainder of the loan to these two countries as a set-off against and to equalise, as it were, the previous loan given to Russia and France. It was not held desirable to get further into the debt of Russia. As your correspondent intimated at the time, China wanted from the very first to divide it equally between the four countries. There was a talk for some time of making the loan one hundred and fifty millions, to cover the cost of the retrocession of Liaotung and the deficit in the price between that fixed by the leaders and par, and to have given this fifty millions to the United States, but this was departed from as no pressure was brought to bear by the United States to participate as a State in the loan. China must borrow another hundred millions to settle her account with Japan. After paying the thirty millions for Liaotung, and the first Japanese instalment, she had on hand some thirty millions, including over a million sterling in the Hongkong Bank and in the Chartered Bank a million sterling. She means to spend the balance of the present loan on a navy and military matters. This leaves her thus with the necessity of borrowing another hundred millions with which to pay Japan. As the security of the Customs is well nigh exhausted by the loan, it seems hardly likely there will be a rush among Western nations, banks, and syndicates for the next loan. The notion that the Customs Revenue Was inadequate to meet the second loan was of course utterly without foundation. Some additional security will require to be pro- vided and it is here where the difficulty will come in. China will either require to pay a greatly increased interest or accept a much lower price, or grant railway, miuing, or other concessions. But to return to the present loan. It has had the strong backing of Lord Salisbury. Through the Chargé d'Affaires here and through the Chinese Minister in London, the British Prime Minister has told the Chinese Government his views and his wishes in plain, forcible, and unmistakeable language regarding this loan. From the first it was thus apparent in what a strong position the two Legations, and consequently the two Banks negotiating the loan, were placed. Orders from London, and we presume also from Berlin, were at all cost to the effect to support the Hong kong Bank. Here it may be said this Bank was acting for the Deutsch Asiatische Bank. Behind these two Banks was a powerful syndicate in London, headed apparently by the Rothschilds, which we suppose to be the issuing house. The first offer of this combination was 5 per cent. at 89 and it must be said that for months they stuck to their guns and would not budge one iota. The Chinese Government felt affronted by the low price offered, the obduracy with which it was maintained, and with some of the conditions, with the result that the Chinese Government looked elsewhere to negotiate the loan. The British and German authorities here were incessant in their visits to the Tsungli Yamen, pressing for the loan and using all manner of arguments, and in the long run it even came to the issuing of an ultimatum.* The Chinese Government was naturally more inclined to deal with the foreign Legations, feeling that they had a guarantee for the carrying out of the loan, but nothing at that time could overcame their unwillingness t deal with the Hongkong Bank. At the end of the Chinese year a memorial against the Bank was actually presented to the Throne. The price, the inelasticity of the offer, the urgency of the demands, the absence of firm offer, and finally the ultimatum with the con; dition that if not accepted harder terms would be demanded, these things brought matters to a crisis, and the negotiations were broken off. 1 Before this time, the loan had been practically settled in their favour. Then began a series of negotiations with Americans, Shanghai Jews, German, British, and French syndicates. Loans in silver on a silver basis and gold loans in pounds sterling, in marks and francs and * The period elapsed by reason of the Yamén Ministers waiting the return of some of their colleagues from the
Eastern Tombs.
CHINA OVERLAND TRADE REPORT.
gold dollars, were showered in upon the poor unfortunate and ignorant Chinese Ministers. Telegrams from Shanghai told them of silver loans at 4 per cent. and 4 per cent. at par which could be negotiated. Parties ar- rived at Peking and others had started over- land from Shanghai and great were the expectations, but an action in the Consular Court at Shanghai by a Chinese Viceroy, which was telegraphed here, pricked the bubble, and the negotiations, although supported by the ex-Viceroy Li, came to an untimely end and parties returned to the South wiser, if sadder, men. On the back of the Shanghai offers came others from America offering terms in silver at a fixed rate of the gold dollar, which had they been able to be carried out would have been most acceptable. Frequent delays and demands for certain periods within which to
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the three southern provinces. The Chinese stood aghast at the extent of these demands. A French gentleman in the pay of the Customs service was nominated to the post of Comptroller or Deputy-Inspector of Customs. Great economy of administration was to result to the Chinese from this arrangement. This appointment spread consternation in the minds of the British members of the Customs service. It was evident that it would lead, if it was not intended to lead, to the resignation of the Inspector-General and with him the eliminating of the British element. The Russian Government came to the help of the French demands and on the very day when the preliminary agreement was signed an interview was to have taken place with the Russian Secretary on the subject. The proposed interviewed was postponed till the following day. Every one felt that a crash was imminent. There was no strong man in the field to take the question in hand and show the Chinese the risks they were running. The French were having it all their own way. H.E. Chang Yin-huan was known to be strongly favourable to the French proposal, for reasons of his own, if it was not he who had invited the French offer. For a few days all Peking held its breath, as it were, and everybody was asking of his neighbour the result of the nego- tiations. The Inspector-General was at last consulted by the Chinese. He had previously refused, it was said, to advise, and he cut the Gordian knot, insisting upon the Banks increas- ing the price to 94. A preliminary contract was drawn out, and the situation was saved. But for his timely interference the loan in all probability would bave fallen to the French. It would be well for China if the I. G. inter- fered more frequently in State affairs. The formal contract was drawn out and signed later and the final signatures were affixed at the date already given, after it had been learned that the two Banks agreed absolutely to raise eight million pounds by the 8th of May. So far the Chinese are secure as to the next Japanese instalment, but the remaining half of the loan need not be taken firm by the banks if the public fail to subscribe. The last tele- grams inform us that the new loan has been largely subscribed both in London and Berlin.. This is a matter which must be extremely accept- able to all having interests in China. The pre- liminary contract was no sooner signed than the representative of the French offer appeared at the Tsungli Yamen regretting the action then concluded and stating that the Chinese could. have made better terms through the French. The explanation of the refusal of the French offer was not, as is asserted, because the French were not prepared to take up the whole amount required, but only a portion of it. It was entirely owing to the conditions annexed. France was anxious to consolidate her material interests in southern China and like Russia have some hold upon the country. The Russians and French are wiser in their day and generation than the shortsighted statesmen who have hitherto directed British affairs.
wire to ascertain facts resulted in still further loss of time. Some English Banks were consulted, but they declined, either because the terms were not good enough or that the thing was already in the hands of the Hongkong London syndicate. Finally, seeing the time was passing and that something must be done. the French appeared on the scene and made an offer. The question was now becoming very serious. Negotiations were sought to be reopened by the Legation in favour of the Hongkong syndicate. The price now offered stood at 901, but still no firm offer was made. The Bank offered to negotiate the loan at 5 per cent. commission and to give the Chinese Government whatever was realised upon the London market, guaranteeing, how. ever, that it should not be less than the above sum. They made conditions, one, six months in which no loan from any other country, exclusive of the two countries negotiat- ing should be entertained, and another, a most important clause, that the present administration of the Imperial Maritime Customs should remain unaltered. The French offer came as an ex- ceedingly disturbing element in the negotiations. The Chinese insisted on their right to freedom of action in spite of their promises to the British Minister-they were determined to borrow in the cheapest market apart from all political or future consideration, It is not quite clear how the French offer came to be presented on the French side. It is averred that the Chinese Gor. ernment asked French assistance to extricate them from their difficulties in the matter of the loan. The Chinese strictly deny that they asked French assistance. They wired to Paris, however, to their Minister to enquire the price of a per cent. loan. There may be some truth in both statements, how much we do not venture to say. The Ex-Viceroy Li was strongly in favour of another French loan. At his Imperial audience, when he received his final orders to attend the corona- tion of the Czar, he was asked by the Emperor about the loan and replied that China should borrow from France. His Imperial master repudiated with scorn the idea that he should sell his country for French francs. When the Ex-Viceroy went to the Tho Park to visit the Empress-Dowager, his patron, the same ques-garding the telegram received anent inscribing tion came up and was dismissed with the remark that the Emperor would not have it so. At the Tsungli Yamen the Ex-Viceroy again advised the aceptance of the French loan in whole or part. but the Ministers had at the very first offer of the loan declared that they never could accept it. Notwithstanding their resolve to refuse the French offer, it was feared that the rory favour- able terms offered by the French would never- theless be accepted by the Chinese. stage Lord Salisbury renewed his protests and At this
gave the Tsungli Yamen clearly to understand. through the Chinese Minister in London, that the Chinese Government had promised the loan to the Anglo-German combination, and that. although they were at liberty to negotiate in the cheapest market, they would be held responsi. ble for whatever results might follow which might prove detrimental to Great Britain. The French Minister must have supposed he held the trump card in his hand when he laid down his five conditions of negotiating the loan, the first three of which were that it must be gua ranteed by the French Government; that the control of the Maritime Customs must be placed in French hands; and that China must grant to France the right of railway construction in
There seems to be some misunderstanding re-
the new loan on the books of the Bank of Eng land. This does not create any obligation on the part of that Bank to make advances upon the loan. It merely gives it a degree of respectability and in this the syndicate has succeeded. There is no doubt now that the whole loan will be floated suc- cessfully. The first issue amounts to £10,000,000. The two Banks have handled the issuing. of the loan with consummate skill. Although the
large figures mentioned by one of your contem. profits to each Bank will fall far short of the
poraries, still it will be considerable, and the monthly payments with the interest thereon and the manipulation of the exchange will bring in to be congratulated on their success and we are a substantial revenue to the Banks. They are
not speaking without some authority when we say that Lord Salisbury's action had tended largely to the successful floating of the loan. Who will take the next hundred million tael loan?-N. C. Daily News correspondent.
Major Morrison, Commandant of the Shang- hai Volunteer Corps, having resigned, Captain B. A. Clarke, as senior Captain, assumed command of the Corps from the 24th April.
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