File No. 893.51/1901
The Minister in China ( Reinsch) to the Secretary of State
Sir: I have the honor to enclose, for your information, a copy of the regulations for the two new domestic loans which are now to be issued.1
There is to be an issue amounting to $48,000,000, called the seventh year short-term loan, which is repayable in five years and is secured upon the deferred Boxer indemnity payments. On account of this excellent security the issue would undoubtedly be very successful were it not that coupled with this loan there is issued a 6 per cent internal loan of the seventh year of the Republic, which is to run for twenty years and which is secured only on the general credit of the Chinese Government.
These loans are issued in order to provide funds for the redemption of the notes of the two Government banks. The notes of these banks, which now stand at 65 per cent of par, are to be accepted in payment for the bonds provided that an equal amount of short-term and long-term bonds are bought. The solution is not one that generally commends itself and it is feared that the value of the notes will not be materially raised, although one half of the issue provided is of such excellent quality.
The above is the opinion of Chinese financiers, such as Mr. Hsü Un-yuen.
I have [etc.]
- Not printed.↩