File No. 893.51/918.

The American Minister to the Secretary of State.

No. 538.]

Sir: With reference to my despatch No. 520,1 of April 18, 1912, regarding the controversy between the Chinese Provisional Government and the banking groups over the loan negotiations, I have the honor to inclose herewith copies of further correspondence exchanged between the Chinese authorities and the ministers concerned.

I have [etc.]

W. J. Calhoun.
[Inclosure 1.—Memorandum.]

The Ministers of the four Powers to the Foreign Office.

The ministers for Great Britain, France, the United States, and Germany have received the memorandum of the 15th instant1 in which the Ministry for Foreign Affairs communicate the reply of the Premier to the memorandum handed by the ministers to the President of the Republic on the 25th ultimo,2 embodying their protest against the loan contract signed with a Belgian syndicate in violation of the written pledges given by the Chinese Government on March 9 last to the group of banks of the four nations.

The ministers note with regret that this memorandum makes no allusion to the circumstances which gave rise to the protest in question and is confined to the statement that regrettable misunderstandings occurred in the negotiations with the groups.

No misunderstandings occurred; what occurred was on the contrary, a signal failure on the part of the Chinese Government to meet its engagements.

The Premier adds that China is in absolute need of the groups’ financial assistance, and that if she fails to obtain it there is every risk of an outbreak of disorder.

The ministers can only remind the Wai Chiao Pu of the great readiness displayed by the group of banks to inaugurate advances to China as soon as the new Government was formed, and of their willingness, even during the recent disturbances in Peking and North China, to continue to advance her monthly considerable sums sufficient, in fact, to enable her to take all necessary steps to prevent the recurrence of these outbreaks.

Under the circumstances the ministers do not feel justified in advising the representatives of the group banks to resume negotiations with the representatives of the Chinese Government until effective steps have been taken by that Government to secure respect for the pledges given to the groups.

Still less are the ministers disposed to give their consent to the resumption of negotiations in view of the fact that, subsequent to their protest, the Chinese Government has thought fit by signing a fresh contract with the Belgian syndicate, to act once again in contravention of the pledges given to the groups on March 9.

[Page 126]
[Inclosure 2.]

The Premier, the Acting Minister for Foreign Affairs, and the Acting Minister for Finance to the Ministers of the four Powers.

Sir: Whereas the loan contract between the former Minister for Finance and the Belgian syndicate, entered into on the 18th of February of the present year and approved by the President on the 14th of March, is in conflict with the letter relating to advances and a loan given by the President to the four-power syndicate on the 9th of March, the Chinese Government now regards the President’s letter of the 9th of March to the four-power syndicate to be of force and undertakes to cancel the clauses of the contract formerly made with the Belgian syndicate which refer to a loan of £10,000,000. After they shall have carefully consulted and agreed they will in turn inform the representatives in Peking of the four powers that they may take note of the fact.

Furthermore, the money received by the Chinese Government from the Belgian syndicate will not be repaid to the Belgian syndicate from any funds hereafter borrowed from the four-power syndicate.

We have the further honor to request that your excellency will take note hereof and direct the four-power syndicate at once to resume negotiations with the Acting Minister of Finance with regard to advances of money so as to relieve the very dangerous situation. This will be just and expedient.

(Signed)
Tong Shao-yi,
Prime Minister
.
Hu Wei-te,
Acting Minister for Foreign Affairs
.
Shih Chao-chi,
Acting Minister far Finance
.

[Seal of the Prime Minister.]

  1. Not printed.
  2. Not printed.
  3. See the Minister’s despatch of March 29, p. 122.