Loan negotiations: withdrawal of the United States group of bankers from the sextuple consortium; conclusion of a reorganization-loan agreement between China and the quintuple group; currency-reform and Manchurian-industrial loan; student loans; miscellaneous loans¹

^1. Continued from For. Rel. 1912, pp. 87–159.

Introductory Note.—On August 30, 1912, the Chinese Government, unable to come to terms with the six-power groups, concluded an agreement with an independent financial group that became known later as the Crisp Group, for a loan of £10,000,000, secured on the unhypothecated revenues of the salt gabelle, and £5,000,000 of this amount was floated on the London market on September 26. This agreement gave the lenders until September 30 to issue the balance of £5,000,000 and, until such issue, conferred a preference for further loans on equal terms.2

On October 23 the six Ministers protested against the surplus revenues of the salt gabelle being applied to the service of the Crisp loan, and notified the Chinese Government that the advances made by the six groups on account of the reorganization loan, amounting to £1,800,000, constituted a prior charge on the revenues of the salt gabelle.

On October 25 the Chinese Government expressed to the representatives of the bankers its desire to cancel the Crisp loan contract and reopen negotiations with the six groups.

On November 4 the six powers directed the representatives of the bankers at Peking to consider, in consultation with their respective Ministers, what conditions for the new loan were in their opinion “indispensable and practicable.” The representatives reported on the 6th that negotiations with the Chinese authorities had been resumed.

On November 12 the bankers representatives informed their principals that the Chinese Government had applied to Mr. Crisp for a further loan of £10,000,000; he had confessed his inability to comply, whereupon the Chinese Government informed him of their intention to apply elsewhere as they considered themselves released from their engagement to him. Three days later the representatives announced [Page 144] receipt of a joint letter from the Premier, the Minister for Foreign Affairs and the Minister of Finance, dated the 11th, expressing the desire of the Chinese Government to negotiate with the six groups and not with others; and reported an interview they had had on the 14th with the Minister of Finance at which the Minister was informed that an undertaking in writing from Mr. Crisp releasing the Chinese Government from their agreement with him would be a necessary condition of continuing negotiations with the six groups.

A conference of the bankers was called for December 13, and on December 9 their representatives were told that it would be necessary to know, before the conference, (1) what was the minimum amount that would satisfy the imperative needs of the Chinese Government up to December 31, and (2) during January, February and March; also (3) what objects the money was required for, and (4) what was the actual position as to the balance of the Crisp loan. These points were the subject of correspondence before, during and after the conference, resulting in the bankers offering, on December 21, to advance £2,000,000 in the second half of January, subject to force majeure, provided the Crisp loan agreement had previously been cancelled and the loan agreement with them had been signed. This latter agreement was to be for £25,000,000 for reorganization purposes, but the Chinese had thus far objected to several of its features. The six Ministers, furthermore, were not unanimous in regard to the terms of the agreement, as appears from the following telegram from Mr. Calhoun, the American Minister.

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