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File No. 893.00/2039.

The American Minister to the Secretary of State.

[Telegram-Paraphrase.]

AMERICAN LEGATION,

Peking, December 12, 1913.

Russia has decided, even without the concurrence of the other powers, to withdraw all Russian troops from Chihli Province on the ground that security is now sufficiently assured by the Chinese Government. This is an astonishing move, as conditions in China are still very uncertain, especially in Inner Mongolia, and many believe a break-up is near.

REINSCH.

File No. 893.00/2041.

The American Minister to the Secretary of State.

[Telegram-Paraphrase.]

AMERICAN LEGATION,

Peking, December 16, 1913.

Nearly all the Ministers, and the Chinese themselves, believe withdrawal of troops would be premature.

File No. 893.00/2041.

REINSCH.

The Secretary of State to the American Minister.

[Telegram-Paraphrase.]

DEPARTMENT OF STATE. Washington, December 17, 1913.

There is no intention at this time on the part of this Government to withdraw or reduce the American expeditionary force in North China.

BRYAN.

File No. 893.01/9.

No. 51.]

The American Minister to the Secretary of State.

AMERICAN LEGATION,

Peking, December 23, 1913. SIR: I have the honor to transmit, for the information of the Department, a memorandum on the political situation, prepared by Mr. Willys R. Peck, Chinese Secretary of this Legation, as well as a number of cuttings' from the Peking Daily News on the same subject.

I have the honor to enclose, also, a copy in translation of a presidential order dated the 18th instant, enclosing a copy of a telegram from the governors of the various provinces to the President, recom

Not printed.

mending the postponement of the reopening of the Parliament, and the granting of authorization to the Administrative Council for drawing up a constitution.

I have [etc.]

PAUL S. REINSCH.

[Inclosure.]

Memorandum on the political situation.

THE POLITICAL COUNCIL (CHENG CHIH Hui).

On November 26, 1913, a Presidential Mandate was published in the Government Gazette announcing the convocation within a few days of a Political Couneil. It was stated that the Council would be constituted as follows:

The members from the Provinces [two from each] will assemble in a few days. In addition the Premier will select two members; the heads of Ministries will each select one member: there will be two legal members; the Bureau of Mongolian and Tibetan Affairs will select a number of members.

The President himself has selected the following members [names].

While the most-talked-of subject at the present time, and obviously a most important development in the trend of political events, there is curiously enough very little authoritative information to be gleaned with respect to this Council. The Government Gazette has contained allusions to it on only three days. On November 26th one was found in the Presidential Mandate quoted above, which contained a list of the President's appointees, eight in number. On December 12th Mr. Li Ching-hsi was appointed Chairman, and two names were substituted for names previously included among the President's representatives; while on December 14th a Vice Chairman and a Chief Secretary were appointed.

It is interesting to note that the President personally in conversation with the American Minister repudiated the idea that the Council was intended to supplant the Assembly in legislative function. What the President and the Cabinet had in mind in creating this organization can be gathered, however, by reference to the addresses delivered on the occasion of the convocation of the Council on December 15, 1913.

In the President's address read that day by Mr. Liang Shih-yi, Chief of the President's Secretariat, occurs a statement to the following effect:

I, the President, am convinced of the necessity of gathering the opinions and ideas of the majority, so this Political Council has been created in the Capital with a view to All the memjoint working with our countrymen for the reconstruction of the Republic. bers assembled here to-day are specially selected from among those officials and others who are experienced in Chinese administration and it is hoped that they will give their good advice to the Government with regard to the introduction of necessary reforms.

In another lengthy address from the President, prepared for distribution among the members of the Council occur the following passages, here summarized:

As you are men of much knowledge and experience I am sure you will be fully capable of assisting the Government in formulating its policies, and in speaking for the people, so as to remove all the obstacles between the Government and the people.

Now those who fought for equality and liberty without bounds did not believe in their hearts in any such doctrine; they simply used it to further their schemes to disturb the

country.

Again, the term Republic is a beautiful term: but it only implies that the people have the right to know about the affairs of the State, not that everybody can have a hand in "Popular it. If everybody tries to put in a hand there will surely be confusion. rights" only means that people have the right of suffrage, representation in deliberative It does not mean that bodies, and the supreme right of electing their own President. they have the right to administer the Government.

At the present time there are too many theorists in the country and most of their talk and suggestions can not be put into practice.

The gist of the President's remarks seems to be that the pressing necessities of the moment, the actual capabilities of the Chinese race, and the lessons of Chinese history, must guide the Government at the present time. He does not believe that the whole theory of government as practiced in China hitherto can be discarded in toto, and western ideas substituted therefor.

On the day of the convocation of the Council the Premier's address, made on behalf of the Cabinet, took the same tone:

In order to effect reorganization in our country we must first carefully examine the past history of our Nation and the existing condition of the people.

He likewise alluded to the past experience of the members of the Council in financial, administrative, and other branches of the Government."

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In the absence of official utterances with reference to the functions and powers of the Political Council, already referred to, an idea regarding them can only be deduced from the local press, foreign and Chinese. From the press it is learned that subjects of administrative, fiscal, and other character will be submitted to the Council for its consideration. Presumably the President and Cabinet will be guided by the decisions arrived at. The President's Office will exercise strict control over the subjects submitted. From the character of the men appointed to the Council the nature and trend of its decisions may be forecasted with considerable accuracy. They are simply men of great experience in the actual governing of their countrymen, of distinguished learning in the classics, and of reputation among the substantial men of the Ch'ing period.

*

Both in his lengthy address to the Council and in his conversation with the American Minister the President has referred in terms almost bitter to the lawlessness and corruption, to the knavery and self-seeking that have masqueraded in Kuangtung and Kiangsi, provinces most pronouncedly republican, under the name of "Republic." That this has been the fact can not be gainsaid. It is therefore not to be wondered at that he has collected about him a body of men to serve as the advisors of himself and the highest officials of the country who, only yesterday, would have been considered intelligent and worthy of great respect. Those members of the Council not directly appointed by the President were selected by his appointees, the members of the Cabinet and the provincial authorities, and while their names are comparatively unknown in the Capital they are in all probability of the same type as his own.

That the President, whether of his own volition or as tool of his camarilla, composed of men whose political fortunes are absolutely dependent on those of the President, is seeking at least temporary absolute power, is a hypothesis accepted by most foreigners in China, and by Chinese as well. This hypothesis is likewise upheld by the President's course of action. After midnight last night (under date of December 18, 1913) there appeared in the Government Gazette the copy of a long telegram signed by every prontinent provincial official in the Republic describing the utter lack of success and accomplishment of the Assembly, urging that the remaining members thereof be given traveling expenses and sent home to await the re-convoking of the Assembly, presumably by the President, and advising that the distinguished example found in American history be followed and the Political Council be made a Constitutional Convention and entrusted with the drawing up of the Constitution. The President in a mandate signed by every member of his Cabinet referred this telegram to the Political Council for consideration and report. This telegram and the mandate issued in response to it bear both internal and external evidence of a carefully framed coup d'état. Internally it is undoubtedly, so a well-informed Chinese states, the literary workmanship of Mr. Jao Han-hsiang, formerly Civil Governor of Hupei with Vice President Li Yuan-hung, who has now been appointed one of the President's representatives in the Council. Externally considered, the telegram is signed by every military and civil governor and special commissioner in the country, which could hardly have been accomplished after due consultation with all the gentlemen whose names appear. Moreover, all the occurrences of the last few weeks are so extremely apposite as to appear to have been staged. No sooner are the Kuo Min Tang members of the Assembly expelled therefrom, thus rendering the Assembly hors de combat, than the Political Council appears on the scene, only to be supported by a telegram emanating from all the prominent officials of the Republic.

The tendency of everyone at the present time, both among foreigners and Chinese, is to "wait and see." Even among the most ardent supporters of a pure Republic for China there is a recognition of the immense difficulties standing in the way, of the present inability of the mass of Chinese citizens to understand and support such a form of Government, and of the mountainous obstacles that the President must surmount in carrying on the practical administration of the Government in this "time of fording the river" to use a Chinese phrase. In all probability some months will be allowed to elapse before any active opposition will be manifested to the apparently dictatorial aspirations of Yuan Shih-k'ai. At the end of such a period measures will be taken, so a person closely connected with the extremists says, measures of a

nature probably directed against the President himself and having as their object his removal from the political arena.

In the meantime there are many who believe that Yuan is acting with patriotic motives, that he really considers that the only force that can amalgamate the present mélée of warring factions, that can reconcile the modern extremists and the vast bulk of the nation caring "for none of these things," is a strong central power, centered in himself, a power that will ultimately be able to bring it about that, to quote his own words, "eternally there shall be good and friendly relationships and internally there shall be peace between the weak and the strong."

Respectfully submitted to the Minister,

AMERICAN LEGATION,

Peking, December 19, 1913.

WILLYS R. PECK.

LOAN NEGOTIATIONS: 1 WITHDRAWAL OF THE UNITED STATES GROUP OF BANKERS FROM THE SEXTUPLE CONSORTIUM; CONCLUSION OF A REORGANIZATION-LOAN AGREEMENT BETWEEN CHINA AND THE QUINTUPLE GROUP — CURRENCYREFORM AND MANCHURIAN - INDUSTRIAL LOAN-STUDENT LOANS - MISCELLANEOUS LOANS.

INTRODUCTORY NOTE.-On August 30, 1912, the Chinese Government, unable to come to terms with the six-power groups, concluded an agreement with an independent financial group that became known later as the Crisp Group, for a loan of £10,000,000, secured on the unhypothecated revenues of the salt gabelle, and £5,000,000 of this amount was floated on the London market on September 26. This agreement gave the lenders until September 30 to issue the balance of £5,000,000 and, until such issue, conferred a preference for further loans on equal terms.2

On October 23 the six Ministers protested against the surplus revenues of the salt gabelle being applied to the service of the Crisp loan, and notified the Chinese Government that the advances made by the six groups on account of the reorganization loan, amounting to £1,800,000, constituted a prior charge on the revenues of the salt gabelle.

On October 25 the Chinese Government expressed to the representatives of the bankers its desire to cancel the Crisp loan contract and reopen negotiations with the six groups.

On November 4 the six powers directed the representatives of the bankers at Peking to consider, in consultation with their respective Ministers, what conditions for the new loan were in their opinion "indispensable and practicable." The representatives reported on the 6th that negotiations with the Chinese authorities had been resumed.

On November 12 the bankers' representatives informed their principals that the Chinese Government had applied to Mr. Crisp for a further loan of £10,000,000; he had confessed his inability to comply, whereupon the Chinese Government informed him of their intention to apply elsewhere as they considered themselves released from their engagement to him. Three days later the representatives an

Continued from For. Rel. 1912, pp. 87-159.

This loan by the Crisp group is referred to, although not by that name, in For. Rel. 1912, pp. 150 (the Minister's telegram of September 11), 152 (telegrams of September 19 and 25), 153 (telegrams of September 26 and 28), 155 (last paragraph), and 158 (reference to the "London syndicate").

nounced receipt of a joint letter from the Premier, the Minister for Foreign Affairs and the Minister of Finance, dated the 11th, expressing the desire of the Chinese Government to negotiate with the six groups and not with others; and reported an interview they had had on the 14th with the Minister of Finance at which the Minister was informed that an undertaking in writing from Mr. Crisp releasing the Chinese Government from their agreement with him would be a necessary condition of continuing negotiations with the six groups.

A conference of the bankers was called for December 13, and on December 9 their representatives were told that it would be necessary to know, before the conference, (1) what was the minimum amount that would satisfy the imperative needs of the Chinese Government up to December 31, and (2) during January, February and March; also (3) what objects the money was required for, and (4) what was the actual position as to the balance of the Crisp loan. These points were the subject of correspondence before, during and after the conference, resulting in the bankers offering, on December 21, to advance £2,000,000 in the second half of January, subject to force majeure, provided the Crisp loan agreement had previously been cancelled and the loan agreement with them had been signed. This latter agreement was to be for £25,000,000 for reorganization purposes, but the Chinese had thus far objected to several of its features. The six Ministers, furthermore, were not unanimous in regard to the terms of the agreement, as appears from the following telegram from Mr. Calhoun, the American Minister.

File No. 893.51/1204.

The American Minister to the Secretary of State:

[Telegram-Paraphrase.]

AMERICAN LEGATION, Peking, December 30, 1912.

Two points that may prove obstructive have been raised in the loan negotiations, which were apparently progressing to agreement. The French have insisted that losses incurred by foreigners during the revolution shall be paid out of loan proceeds; otherwise the loan will not be listed in Paris. The Minister of Finance disclaims authority to negotiate on the subject, and also refuses to accept the provision in the contracts for foreign auditors and foreign supervisors for salt gabelle. The bankers referred both questions to their six Ministers, who met this afternoon. Suggestion was made at the meeting that the amount of the revolutionary claims was not known; that many were doubtless exaggerated or without merit; that the question of liability in many cases was involved; that the amount of the proposed loan was not sufficient for claims and other pressing necessities; therefore the Chinese cannot be expected to make commitment on the subject at this time. Finally the French and Japanese Ministers were

In this connection see "Claims of American citizens against China," telegram of December 31, 1912, p. -.

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