File No. 893.51/908.
The Chinese Minister to the Secretary of State.
Washington, May 27, 1912.
Throughout the loan negotiation with the four-power group the Chinese Government has invariably maintained a conciliating attitude. When on the 29th of February disorder broke out among some mutinous soldiers at Peking the Government, being in urgent need of funds, requested the group to make an immediate advance, and failing to secure such an advance after having awaited as long as possible the Government was finally obliged to obtain a loan through the Belgian bankers. Yet when negotiation was resumed with the four-power group rescission of this Belgian contract was readily agreed to by the Chinese Government.
Taking advantage of the financial condition of the Government the group pressed for further concessions, insisting upon the supervision over expenditures and disbandment of troops. When these proposals became known the whole country was unanimous in opposition to them.
Finally an understanding was reached through the finance minister whereby the disbandment of troops was to be arranged for through certain Chinese maritime customs officials specially designated by the Chinese Government, [and] provision was made for the creation of a bureau to which two representatives were to be appointed, one by the Board of Finance, the other by the four-power group, to take charge of the accounts pertaining to the advance. [Page 135] The arrangement made for the disbandment of troops was to cease to operate and the bureau to be abolished as soon as the entire advance is paid over in October of the present year.
As regards the large industrial loan now pending, the Government is disposed to conform to the terms of similar industrial loans previously contracted by China.
While it is not yet fully known what attitude the four-power group will assume as the result of the conference at London, information has already reached the Government that the group intends shortly to bring pressure to bear upon certain American bankers who have made a loan to the Chili provincial government, and other foreign creditors who have made local loans, to ally themselves with the group. If the group decides to carry out its intention in this respect a most dangerous situation will be created, particularly at this stage when the underfed soldiers are clamoring for pay and the local bandits have not yet been entirely suppressed.
There seems to be no question as to China’s ability to pay the interest and principal of any large loan she might contract. The salt monopoly alone is expected to yield an increase in revenue amounting to about 30,000,000 taels a year. Therefore it seems unreasonable that the four-power group should insist upon terms which have no direct bearing upon the question of security or mode of repayment.