File No. 893.51/1015.
The American Minister to the Secretary of State.
Peking, July 2, 1912.
Sir: * * * The opinion is entertained by my colleagues interested in the proposition and by the bankers as well, and I agree with them, that the Chinese will not submit to or accept the terms imposed by the bankers. It is evident that in the present temper of the people violent and widespread opposition to the large measure of control and supervision required will be manifested, even though the authorities here were disposed to accede thereto. And it is undoubtedly true that the Central Government does not have the power to enforce obedience to the terms of the contract, or the courage to attempt it if they had the power. The inevitable result is that a break must soon occur between the Chinese and the banking groups. It may be that the former will be able to negotiate some small loans here and there, but as long as the French market remains closed it is safe to say that no large loan can be floated. Some of the provinces, notably Hupeh and Kwangtung, are apparently taking care of themselves. They have disbanded and paid off a good many troops. They are said to be collecting some taxes. They have reestablished likin stations and are collecting some revenue therefrom. These are the richer, the more prosperous provinces, and no such result can be expected from the country generally. It is to be remarked that the more self-dependent the provinces are, the more independent they become, and the tie that binds them to the central government is thereby proportionately weakened.
The British Minister also called my attention to the fact that the salt gabelle was relied on as the principal security for the proposed loan. He doubted the sufficiency of that security. From the best information he could obtain, the net revenue which the central government had heretofore received was only about 13,000,000 taels per annum; and with no assurance that the Government will receive any larger proportion of it in the future than it has in the past, no increased security can reasonably be expected therefrom. Hence, he said, the important query is, What security have the Chinese to give for the additional loans? * * *
Hsiung Hsi-ling, the Minister of Finance, in his talk with me said there were now about 1,000,000 men under arms, and to disband all but about 400,000 was the purpose of the Government, and the proceeds of the desired loan were to be applied to that end. * * * told the Minister that we only desired that the proceeds of the loans should be carefully guarded, wisely used and honestly accounted for, so that the money might help China rather than impose a heavy debt upon her without any corresponding benefits. * * *
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