893.51/4134: Telegram
The Minister in China (Schurman) to the Secretary of State
[Received 11:10 p.m.]
5. On December 23rd, at request of group representatives, British, French and Japanese colleagues and I addressed a joint note31 to the Minister for Foreign Affairs drawing attention to failure of the Chinese Government to meet certain of their obligations to foreign creditors and takes [taking] exception to preferential treatment of the Chinese internal loans to the detriment of the interests of our nationals who are creditors of the Chinese Government and holders of foreign loans guaranteed by that Government. Note requested that in future “surplus customs revenues should be applied no longer exclusively to the service of internal loans but also to the liquidation of foreign debts and obligations guaranteed by the Chinese Government.”
I had a long conference with Aglen32 evening 3d. He says above note continued [combined?] with a statement which he made to financial commission has alarmed Chinese bankers and financiers, depressed bonds and scared off purchasers. Shanghai Chamber of Commerce, bankers association and native bankers association have telegraphed him in protest and demand customs and salt revenue be preserved exclusively for internal loans. Aglen says $24,000,000 paid from customs and salt for service internal loans last year of which 21,000,000 from customs.
[Paraphrase.] Aglen told me that he is going to recommend the cessation of the amortization payments on the Chinese internal loans which amount to more than half of the $24,000,000, this saving to be used to pay as much of the interest on the foreign debts as it will cover. He says that he will have the opposition of the Chinese bankers, but he believes that his recommendation will be accepted, as otherwise the Government Has no means of meeting the demand of the four foreign Ministers. This demand he considers to be entirely just. [End paraphrase.]
Customs revenue 1922 amounted to Haikwan taels 58,600,000 an increase of 4, 100,000 taels on previous record collection of 1921. [Page 526] Owing to unfavorable exchange however increase in gold is only 215,000 pounds sterling.
[Paraphrase,] Aglen also told me that foreign business has decreased but that there has been a great increase in Chinese business. He says that foreign business men, especially middlemen, are being systematically crowded out by Chinese. Many foreign firms are on this account in a shaky condition and they are being carried by the banks. He told of a famous British company which last year lost $2,000,000. [End paraphrase.]
Aglen sees no way by which Government can effect settlements at Chinese New Year which comes on February 16th. Agrees with other observers that this year will be very critical for China.
Aglen expressed earnest hope special tariff conference33 might be hastened. I replied that entire revenue from 2½ percent surtax would probably be devoted to service foreign debts. Aglen declared would be great advantage to China [apparent omission] unsecured and inadequately secured foreign debts were out of the way.
Aglen says Government has already earmarked entire increase customs revenue from 3½ to 5 percent effective for administrative and military purposes. Christian General Feng’s 30,000 troops now here in Peking have not been paid for nine months. Aglen also mentioned schools and diplomatic service.
- Not printed.↩
- Sir Francis Aglen, inspector general of Chinese Maritime Customs.↩
- The reference is to the conference provided for in art. ii of the Washington Conference Treaty Relating to the Chinese Customs Tariff, printed in Foreign Relations, 1922, vol. i, p. 282. The deposit of ratifications of this treaty did not take place until Aug. 5, 1925. The Special Tariff Conference convened at Peking Oct. 26, 1925.↩