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the Chinese the right to deposit half of the proceeds of the loan during construction of the railways with the Chiaotung and Ta Ching Government Banks, sufficient amounts for one month's estimate to be transferred to the European banks as required. (File Nos. 893.51/386 and 398.)

Further changes were agreed to in regard to the railway system: The section from Ichang to the Szechuan border was included, and the Kuangtung and Szechuan sections excluded for domestic political reasons; the bankers were given the preference on equal terms in case of further loans for those sections, and provision was made for an additional loan of £4,000,000 if necessary. (File No. 893.51/428.)

. Thus amended the contract was signed May 20, 1911. (File No. 893.51/438 and (text) 498), and on June 10, 1911, the foreign Office authorized the Chinese minister to certify the prospectus. (File No.

( 893.51/477.)


NOTE.—On October 8, 1903, a treaty was concluded between the United States and China,? Article XIII of which provides as follows: “ China agrees to take the necessary steps to provide for a uniform national coinage which shall be legal tender in payment of all duties, taxes and other obligations throughout the Empire by the citizens of the United States as well as Chinese subjects. It is understood, however, that all customs duties shall continue to be calculated and paid on the basis of the Haikuan Tael."

On August 11, 1908, his excellency Tang Shao Yi, special ambassador to the United States, proposed to the Secretary of State the flotation of a loan for public works in Manchuria. On November 8, 1908, while this was under consideration, the viceroy of Manchuria concluded a loan with the Hongkong & Shanghai Banking Corporation and its French and German colleagues for $1,100,000.

In December, 1908, Tang Shao Yi proposed to the Secretary of State that China, through American capitalists, float a large loan for meeting the expenses incident to currency reform and the abolition of likin. The proposal was laid before Messrs. Kuhn, Loeb & Co., who accepted it. The Chinese Government did not, however, find itself ready immediately to begin negotiations,

On July 6, 1909, the British, French and German bankers signed certain agreements in London providing that if one of the parties thereto undertook negotiations with China under conditions that rendered impossible the admission of the other parties either to joint negotiation or joint signature, the party undertaking the business could negotiate and sign alone, making provision in the loan agreement for enabling the other parties to join in issuing the bonds although not signatories of the agreement itself.

On May 24, 1910, the British, French and German banking groups, in conference at Paris, invited the American group to enter into a quadruple understanding regarding loans to China.

On May 24, 1910, the Chinese Government issued an edict establishing a uniform monetary standard on the basis of the Mexican silver dollar. A supplementary edict centralized the banking privilege of issuing notes, and closed the provincial mints. (File No. 2112/117.)

* For. Rel. 1903, p. 98.

After interviews on this subject between the Chinese Minister and the Secretary of State the following correspondence began. The Manchurian or "Industrial Development” loan enters with the American Minister's telegram of October 2, 1910. The combined currency-reform and industrial-development loan agreement appears on April 27, 1911. The beginning of the correspondence relating to inclusion of Japanese and Russian groups begins May 11, 1911. The revolution complicates the situation beginning with the Minister's telegram of November 17, 1911, and introducing the question of advances for current administrative expenses. Early references to the reorganization loan begin March 12, 1912.

File No. 893.51/131a.)
The Acting Secretary of State to the Chinese Minister.

(Aide mémoire.) The American Government is glad to learn that China has under consideration the adoption of a new currency system, uniform for the whole Empire, in fulfillment of the engagement made in Article XIII of the Commercial Treaty of 1903 between the United States and China, and that the Chinese Minister to the United States is preparing a memorial to his Government recommending the estabIishment of the new system upon a gold exchange basis, and is about to telegraph the Wai-wu Pu urging immediate attention to the matter as likely to pave the way for a revision of the import tariff.

Since some of the powers have manifested a disposition to make their consent to a discussion of tariff revision contingent upon the inauguration of certain reforms provided for in recent commercial treaties, it is believed that the introduction of a satisfactory currency system will place China in a very advantageous position in respect to the proposal to increase the import duties. It is hoped, therefore, that the Minister will carry out his reported intention to send such a telegram. The telegram ought also to state clearly that such action to be effective should be taken without delay and that in order to reassure the powers interested it will be necessary to employ a foreign monetary expert and that such expert ought to be engaged before China proceeds so far with its plans as to make revision difficult in case the expert should recommend a revision of the plans. DEPARTMENT OF STATE,

Washington, June 13, 1910.

File No. 893.51/122.
The American Minister to the Secretary of State.


Peking, September 22, 1910. By order of the Board of Finance and with the approval of the Prince Regent, the Vice President of the Board of Communications, Sheng, has just called upon me to ask if American bankers would be willing to undertake a loan of about fifty million taels in order to elaborate the currency reform. Such a loan would be secured on unpledged customs and likin, amounting to between five and six million taels annually. Sheng asked if our banking interests could not send some one here, as he intended to give Americans the preference. He further said that he expected to negotiate with us, at some future time, a conversion of all outstanding small loans. Sheng requests a prompt answer as to the attitude of our financiers, and due weight should be attached to his words as he has been called to Peking for the express purpose of directing the currency reform.


File No. 893.51/122.
The Secretary of State to the American Minister.


Washington, September 29, 1910. You may inform the Chinese Government that the Morgan syndicate state that they will undertake the loan and the Department hopes the arrangements can soon be made.


File 893.51/134.
The American Minister to the Secretary of State.
[Telegram.--Paraphrase.-Extract. )


Peking, October 2, 1910. Duke Tsai-tse and Sheng Kung Pao suggest that if our bankers are willing to undertake a currency loan of 50,000,000 gold dollars, the Manchurian loanof 20,000,000 taels should be included therein, as they do not want an Imperial loan for Manchuria to be treated differently from one for the rest of China. The guaranties will be one half in Manchuria and one half in China, embracing unpledged customs and likin. This, it was declared, was ample security, and China was, further, free to dispose of the recent increase in customs receipts resulting from the increased volume of trade; but I doubt that the treaty powers will share this view.

The Chinese Government desires to negotiate this loan entirely with us, and I was told that it had not yet been offered to anyone else. We shall however be at liberty to offer the bonds in other markets.

The request for a financial expert was repeated, and it was urged that he come with all possible speed, for fear that other powers hear of these negotiations and impede them. It was further stated that if we make this loan an American would be appointed as financial adviser, in a purely consultative capacity, to assist the currency reform, having nothing to do with the loan negotiations,


1 Tbls is later referred to as the “Industrial Development Loan."

File No. 893.51/142.

The Acting Secretary of State to the American Minister.



Washington, October 6, 1910. Yesterday the group read the substance of your telegram of October 2 and their formal reply has been received, saying that they are pleased to undertake the loan and ready to discuss the details of the agreement and the guaranties and their apportionment between China proper and Manchuria; and that they are prepared to send to Peking a financier of experience to conduct the negotiations.

In view of this acceptance of the Imperial Government's latest proposition the Department and the group assume that all negotiations for a separate Manchurian loan will be abandoned and the Viceroy of Manchuria so instructed at once.

You will communicate the foregoing to the Chinese authorities concerned, immediately and in writing, and obtain an acknowledgment.


File No. 893,51/168.

The American Minister to the Secretary of State.

[Telegram.- Paraphrase.—Extract.)


Peking, October 27, 1910. Currency loan. The preliminary agreement signed today. The Imperial edict and the confirmation by the Foreign Office will come in a few days. The Duke says the group may have as many associates as they please but that he will sign the final agreement with the Americans alone and will expect them to hold a majority of the bonds in order to control the issue.


File No. 893.51/175b.

The Acting Secretary of State to the American Ambassudor

to France.

(Telegram.- Paraphrase.---Extract.)


Washington, October 31, 1910. The competent Chinese authorities have now signed and ratified a preliminary agreement with an American financial group for a loan of $50,000,000 gold, the principal part of which is to be used to reform China's currency system, in pursuance of her treaty obligations toward the United States, Great Britain and Japan. This Government believes the proposed reform to be of fundamental importance to all the powers who have extensive commercial relations with China as well as to China herself and the countries that have treaty provisions relating thereto. In its endeavor to cause this reform to be carried out, this Government will welcome the cordial support of the interested powers.

1 The same to the Embassies at London, Berlin, St. Petersburg and Tokyo,

You may informally make the foregoing known to the Government to which you are accredited.


NOTE.—On October 31, 1910, the French and Gernian bankers insisted on amending the agreements of July 6, 1909, so as to require joint signature of the final loan agreement with China by all four groups. The British and American groups consented to such amendments at a conference in London, November 8-10, 1910, the American group obtaining, however, an exception of the currency loan agreement if the Chinese Government would not consent to the admission of the other groups as signatories. A quadruple agreement was thereupon signed, providing for joint action in carrying Chinese loans.

File No. 893.51/288.)

The Secretary of State to the Special Envoy of China.



Washington, January 18, 1911. MY DEAR MR. LIANG: Herewith I send you some notes on the course of the loan negotiations now pending at Peking. I quite understand that you are not charged with this important business, but since we have informally discussed it I naturally feel entirely unwilling that your excellency should remain under certain misapprehensions which have not unnaturally arisen in your mind because of the fact that you have been isolated from these negotiations which have been passing through so many stages at Peking. I am [etc.]

P. C. Knox.

(Inclosure — Extract.]

Notes on the course of the loan negotiations now pending at Peking.

The Department of State learned last spring from the Chinese Minister in Washington and from the American Legation at Peking that China had decided to adopt a uniform currency for the whole Empire in fulfillment of pledges given to the United States in the treaty of 1903. The Chinese Minister in. formed the Department that he was preparing a memorial upon the subject, and on June 14, 1910, he called at the Department to talk the matter over. The Assistant Secretary of State handed the Minister an aide-mémoire expressing the pleasure of the Department in learning that China was about to undertake this important reform and sugggested that to reassure the powers interested it would be well to employ a foreign monetary expert to assist in formulating the plans, but distinctly disclaimed any desire to force an American adviser upon China. This was two months before the American Government learned that a loan was in contemplation by China for purposes of currency reform. The loan was solicited by China, whose request that American bankers be asked

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