Currency Reform And Industrial Development Loans.

Note.—On October 8, 1903, a treaty was concluded between the United States and China,1 Article XIII of which provides as follows: “China agrees to take the necessary steps to provide for a uniform national coinage which shall be legal tender in payment of all duties, taxes and other obligations throughout the Empire by the citizens of the United States as well as Chinese subjects. It is understood, however, that all customs duties shall continue to be calculated and paid on the basis of the Haikuan Tael.”

On August 11, 1908, his excellency Tang Shao Yi, special ambassador to the United States, proposed to the Secretary of State the flotation of a loan for public works in Manchuria. On November 8, 1908, while this was under consideration, the viceroy of Manchuria concluded a loan with the Hongkong & Shanghai Banking Corporation and its French and German colleagues for $1,100,000.

In December, 1908, Tang Shao Yi proposed to the Secretary of State that China, through American capitalists, float a large loan for meeting the expenses incident to currency reform and the abolition of likin. The proposal was laid before Messrs. Kuhn, Loeb & Co., who accepted it. The Chinese Government did not, however, find itself ready immediately to begin negotiations.

On July 6, 1909, the British, French and German bankers signed certain agreements in London providing that if one of the parties thereto undertook negotiations with China under conditions that rendered impossible the admission of the other parties either to joint negotiation or joint signature, the party undertaking the business could negotiate and sign alone, making provision in the loan agreement for enabling the other parties to join in issuing the bonds although not signatories of the agreement itself.

On May 24, 1910, the British, French and German banking groups, in conference at Paris, invited the American group to enter into a quadruple understanding regarding loans to China.

On May 24. 1910, the Chinese Government issued an edict establishing a uniform monetary standard on the basis of the Mexican [Page 89] silver dollar. A supplementary edict centralized the banking privilege of issuing notes, and closed the provincial mints. (File No. 2112/117.)

After interviews on this subject between the Chinese Minister and the Secretary of State the following correspondence began. The Manchurian or “Industrial Development” loan enters with the American Minister’s telegram of October 2, 1910. The combined currency-reform and industrial-development loan agreement appears on April 27, 1911. The beginning of the correspondence relating to inclusion of Japanese and Russian groups begins May 11, 1911. The revolution complicates the situation beginning with the Minister’s telegram of November 17, 1911, and introducing the question of advances for current administrative expenses. Early references to the reorganization loan begin March 12, 1912.

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