File No. 893.51/1220.
The following urgent memorandum from the Minister for Foreign Affairs
just received. I respectfully request an early expression of your views
since I am informed that a meeting of the representatives of the six
groups is to take place here in a few days.
[Memorandum.]
The British Foreign
Office to the American
Embassy.
The United States Government are aware that at a meeting of the
representatives six international financial groups held in London
December 13–14, 1912, a draft agreement for a loan to the Chinese
Government of £25,000,000 for reorganization purposes was
considered.
In connection with the preference as suggested by the Chinese
Minister of Finance with respect to the price on definite industrial
enterprises to be specified for under Article 17, it was proposed by
the groups to eliminate industrial loans from this clause of the
draft agreement and to claim a preference merely for Government
financial loans until the purposes contemplated under Article 2 of
the agreement are completed. With this object in view it was further
suggested that in addition to a general preference clause as in
former agreements the following should be inserted:
After the issue of the present loan of £25,000,000 and for a
period of two years, should the Chinese Government proceed
to issue a supplementing loan for the purposes specified in
Article 2 of this agreement, or of other Government
financial loans, a preferential right is granted to the six
groups at blank per cent under the average price of the
present loan, and this preference shall apply even for a
further period as regards future loans secured on the salt
gabelle. In any case, the Chinese Government will not, for a
period of six months after the issue of the present loan,
proceed with the issue of any other Government loan, or
industrial loan with the guarantee of the Chinese
Government, without the consent of the six groups.
In reply to these proposals the groups’ agents in Peking reported
that the Minister of Finance objected to any time limit, but was
prepared to accept the following article:
In the event of the Chinese Government desiring to issue
further loans secured on the salt revenue or a supplementary
loan for purposes of the nature specified in Article 2,
preference will be given to the banks on the same terms of
commission as those of the present agreement. The Chinese
Government further undertake, for a period of six months
after the issue of the present loan, not to issue any other
loan concluded later than December 1, 1912, without previous
agreement with the banks.
This stipulation would, however, admit the issue of the loan provided
for in the agreement signed at Peking on September 24, 1912, for the
construction [Page 146] by a Belgian
company of a railway from Lanchow to Haicbow.1 This loan was to be for an amount of
£10,000,000, a sum which would doubtless not be forthcoming from
Belgium and would therefore have to be obtained, at any rate in
part, elsewhere. It would seem unfair that any one of the powers of
the sextuple group should profit by the abstention of the rest, and
it would seem reasonable that there should be some understanding
amongst the six allied powers with regard to a concession which was
the direct outcome of the policy they have pursued in common since
their declaration of the ninth July last year.
His Majesty’s Government would therefore propose that the six
Governments should pledge themselves to refuse their support to any
of their nationals who might propose to finance this loan. This
would probably in practice entail the cancellation of the contract
and its internationalization by its being handed over to the groups
on payment of compensation.
Foreign Office,
London, January 7, 1913.
