§ 1. Mr. GINNELLasked the Secretary of State for Foreign Affairs, whether the British Government continues to support what remains of the six-Power finance group in imposing upon China the conditions encroaching upon the administrative independence of China, on account of which the Government of the United States has withdrawn its support from the American section of that group; whether China will be left free to borrow on any terms satisfactory to lenders; and whether before the completion of any agreement for a loan involving the consequences indicated, this House will be informed of its full terms and conditions?
§ The SECRETARY of STATE for FOREIGN AFFAIRS (Sir E. Grey)His Majesty's Government have no intention of departing from the policy which they have pursued hitherto in the matter of the Chinese Reorganisation Loan. I must again refer the hon. Member to replies which I have constantly given in the House to explain the true nature of that policy. I cannot make the promise asked in the last part of the question, and I deprecate the assumption that any loan will have the invidious consequences attributed to it by 1803 the hon. Member, though every loan to an individual or to a State entails certain obligations upon the borrower.
§ Mr. GINNELLIs the right hon. Gentleman aware that the French Government, for example, do not restrain their people from lending privately outside?
§ Sir E. GREYNo, I am not aware of that.
§ Mr. KINGWould the right hon. Gentleman defer all action until the meeting of the Chinese Parliament, in the middle of next month?
§ Sir E. GREYThere is no reason for us to defer action; it is a question for the Chinese Government as to whether they intend to accept the loan.
§ Mr. SPEAKERWe are getting a good deal away from the question.
4. Mr. POINTERasked the Secretary of State for Foreign Affairs, whether in view of the fact that British financiers and contractors are willing to make advances to and enter into agreements with the Chinese Government, but hesitate to do so because they find, on inquiry, that such action would be disapproved by the Government, he will take steps to give such financial freedom to British interests as the financiers and contractors concerned feel to be desirable and which, undoubtedly, would be of value to British trade and industry?
§ Sir E. GREYI realise that there is an apparent hardship involved in the refusal of His Majesty's Government pending the negotiation and issue of the Chinese Reorganisation Loan, to give their approval to enterprises which British contractors desire to undertake in China, in so far as they mean an advance of money, direct or indirect, to the Chinese Government, but I am as fully convinced now as I was when His Majesty's Government embarked on the policy of co-operating with other Powers that that policy is ultimately to the advantage of British trade and industry, since it is, in my opinion, the only means by which Chinese credit can be securely established and conditions in China rendered favourable for industrial 1804 enterprise in the future. I am not prepared, therefore, to reconsider at present my decision to give exclusive support to the authorised British group. If this policy fails, and there is unrestricted competition to lend money to China, I must, of course, reconsider the whole situation, but I fear that it will result in competition between different countries to get political advantages in return for easy loans on improvident terms.
Mr. POINTERMay I ask whether the effect of the Government's approval of the group arrangement does not restrict the opportunity and power of China to borrow, and whether, seeing that the American group has withdrawn, it may not prejudice British trading interests owing to the difference now in the circumstances?
§ Sir E. GREYI do not think that will be the result, because I think unrestricted competition will tend to very undesirable competition between the different nations to get political advantages in China in return for easy loans on improvident terms. If that is so, Chinese credit will be impaired, the effect on Chinese credit will be bad, and therefore not good for us.
§ Mr. D. MASONAre not the people who were prepared to lend the best judges as to whether or not the terms are improvident?
§ Sir E. GREYI am afraid that is too much of a general rule to lay down. It is often the case that people are very anxious to make loans which are of immediate financial profit to themselves but not necessarily an advantage to the trade of this country or an advantage to the trade of the country that borrows.
§ Mr. D. MASONDoes the right hon. Gentleman—
§ Mr. SPEAKERI do not think we can carry this question further; it is really more suitable for Supply.
§ 5. Mr. GINNELLasked the Secretary of State for Foreign Affairs whether there are British banking houses and contracting firms which are willing to lend money to, and undertake work in, China, but are prevented because they find, on inquiry, that such action on their part would be regarded unfavourably at the Foreign Office, though they consider the security offered to them quite good and sound, and that the business would in every way be desirable and beneficial, particularly to 1805 the industrial classes in this country; and, if so, whether he proposes to take any action in the matter?
§ Sir E. GREYI must refer the hon. Member to the answer which I have just given to the hon. Member for the Attercliffe Division of Sheffield.
§ 6. Mr. GINNELLasked the Secretary of State for Foreign Affairs whether he is aware that the terms on which the consortium of cosmopolitan bankers, formerly known as the Sextuple Group, offered to advance money to China were such that, if completed as designed, having regard to the suggested price of issue and rate of interest, the value of previously issued Chinese loans would, considered comparatively, have declined about 14 per cent.; and, in view of the fact that many British investors are interested in these previous Chinese issues, in the event of his supporting what remains of the group, what steps does he propose to take to prevent this artificial depreciation of the property of British investors for the advantage of persons of no nationality except such as may have been acquired for financial purposes?
§ Sir E. GREYHis Majesty's Government have no concern with the purely financial aspect of the loan, which is a matter for the financiers to settle with the Chinese Government, and I am not aware that the latter are dissatisfied with the conditions proposed. His Majesty's Government cannot control the effect of the loan upon previous issues, but I may say that I believe the hon. Member's calculation to be without foundation in fact.
§ 7. Mr. GINNELLasked the Secretary of State for Foreign Affairs, now that the financial consortium to take advantage of China's temporary difficulties in order to subject her to conditions adverse to her future progress has been broken by the refusal of the American Government to concur, whether, before supporting the remnant of the consortium in that attempt, he will take the opinion of this House on the conditions to be imposed upon China?
§ Sir E. GREYThe hon. Member is at liberty to take one of the regular opportunities for raising this question, but His Majesty's Government have no intention of dissociating themselves from the action of the other Powers who still approve the policy which has been the basis of the reorganisation loan negotiations.
§ Mr. GINNELLThe right hon. Gentleman has not answered the last part of the question as to whether this House will have an opportunity of expressing its view?
§ Sir E. GREYI have answered the hon. Member; he is at liberty to take one of the regular opportunities for raising this question. There are several opportunities in the course of the Session.
§ 8. Sir J. D. REESasked what is the attitude of the French Government to-wards the Franco-Belgian syndicate which has just been formed, in conjunction with the Chinese Government, to establish an industrial bank in China which, among other attributes, will have the power, if the agreement, already provisionally signed, be ratified, of floating loans and obtaining and exploiting concessions?
§ Sir E. GREYAs I informed the hon. Member for Melton on the 26th instant, I am not aware of a scheme to establish an industrial bank in China, but I am making inquiries of His Majesty's Minister at Pekin.
§ 9. Sir J. D. REESasked whether, in view of the official announcement that the American financiers have withdrawn from the sextuple group, the five groups which remain will be supported by their various Governments against any independent loan to China which may be floated in America and supported by the United States Government?
§ Sir E. GREYAs far as His Majesty's Government are concerned, the answer is in the affirmative, and I have no reason to suppose that the other Powers interested will adopt a different course.
§ 10. Sir J. D. REESasked the Secretary of State whether he has any information to the effect that a new American group has been formed to negotiate an independent loan with China; and whether, in view of the withdrawal of the United States Government, the quintuple Powers could object to this isolated action on the part of those who have hitherto co-operated with them?
§ Sir E. GREYThe answer to the first part of the question is in the negative; to the second, in the affirmative. The hon. Member is, however, here assuming that a new American group would be composed of the group that has formed part of the Six-Power Consortium in the Reorganisation 1807 Loan negotiations. But I understand that this would not be possible until a specific period has elapsed, since each group is bound by agreement to give notice of its withdrawal from the Consortium, and it would be some time before it was free to take separate action on its own account.
11. Mr. MacCALLUM SCOTTasked the Secretary of State whether he has received any expressions of opinion from British interests in the Far East, either for or against the methods of financing China as embodied in the proposals of the sextuple, now the quintuple, group loan; and will he, in view of the change in the situation produced by the withdrawal of the United States Government, lay any such representations before the House?
§ Sir E. GREYI have not officially received many expressions of opinion from the quarters referred to for or against the policy of His Majesty's Government in the matter of Chinese finance. Among the principal critics of the policy of His Majesty's Government were the Eastern Bank, and the correspondence that passed between them and the Foreign Office has already been published in Parliamentary Paper No. 2, 1912. Correspondence of a similar nature has likewise passed between the Foreign Office and the Chartered Bank but, in view of its similarity, I do not think its publication would be of interest.
12. Mr. MacCALLUM SCOTTasked whether the United States was one of the four Powers originally co-operating in the proposal to finance China; whether this co-operation was, at least in part, based on previous joint collaboration in the work of railway finance in China; whether the subsequent participation of Russia and Japan in what became known as the sextuple group was either suggested or solicited by the four; and whether the withdrawal of one of the original founders of the international group substantially affects the possibility of attaining the objects for which the group was formed?
§ Sir E. GREYThe answers to the first three parts of the question are in the affirmative. With regard to part four, the withdrawal of one group from the Consortium need not necessarily affect the prospects of a favourable settlement.
§ 13. Mr. WALTER GUINNESSasked the particulars of the formation of a China 1808 industrial bank in which, by agreement, the Chinese Government participates to the extent of one-third of the capital of 45,000,000 francs, the balance being provided by a Franco-Belgian syndicate; and whether this undertaking enjoys the support of the French Government, which is one of the signatories to the six-Power agreement?
§ Sir E. GREYI would refer the hon. Member to the reply which I gave on the 26th instant to the hon. Member for Melton and to-day to the hon. Member for East Nottingham. I have not got the information. I will inquire of the British Minister at Pekin.
§ Mr. W. GUINNESSHas the right hon. Gentleman any information as to whether the French Government is supporting the group?
§ Sir E. GREYI will inquire as to what is known of this scheme. When I know about the scheme I will inquire if there is any truth in the statement as to the attitude of the French Government.
§ 14. Mr. W. GUINNESSasked whether, in view of the fact that the President of the United States has told Mr. George B. Rea, a member of the Chinese Railway Commission, that his Government is now formulating a new policy with regard to China which will leave nothing undone legitimately to promote American interests, he will take steps to reconsider the Foreign Office financial policy towards China with a view to giving similar freedom to British interests?
§ Sir E. GREYAs I have already stated, I have received no official intimation from the United States Government of a change of policy on their part with regard to Chinese finance, but His Majesty's Government have no intention of departing from the policy which they have hitherto pursued in the matter. It is not to the advantage of British or Chinese interests to encourage a policy of loans without guarantees either for their security or good use.
§ Mr. W. GUINNESSMay I ask whether the political conditions do not involve the continuation of certain unpopular taxes which otherwise the Chinese Parliament might be free to abolish, and whether they necessarily will not be greatly hampered by other conditions if these taxes are to be continued under European control and management?
§ Sir E. GREYOf course all taxes are unpopular, but if you wish to borrow money there must be some security, and the usual security in cases of this kind is that some particular tax or source of revenue should be assigned for the services of the loan. Of course that is a condition which may not be popular, but it is a condition inseparable from borrowing at all if their is to be security for the loan.
§ 15. Mr. W. GUINNESSasked whether the same views of policy which actuated the British Government in its support of the Sextuple Group will similarly actuate it in its relations towards the same loan now that the United States has withdrawn; whether certain political conditions unconnected with this loan, to which China has objected, have not been put forward by various Powers; and whether British finance will remain identified with the old proposals while American finance, free from Government control, is placed in a more advantageous position to negotiate?
§ Sir E. GREYThe answer to the first part of the question is in the affirmative. No political conditions unconnected with the reorganisation loan have been put forward by the Powers. There are, of course, certain political considerations inherent in the loan question, but they are political only in the sense that they aim at assisting China to re-establish her political administration both in her own interests and in order to maintain her credit so as to create a favourable field for foreign trade and industry in the future. It was to secure these ends that the Powers attached certain conditions to their approval of the loan, and it was with their unanimous consent that these conditions were proposed to the Chinese Government. I can express no opinion in regard to the last point raised by the hon. Member. I do not think ill-secured or ill-employed loans will be advantageous to British interests, even if made by British financiers.
§ 16. Mr. W. GUINNESSasked whether, in view of the entirely new situation in regard to the financing of China created by the withdrawal of the United States from the so-called sextuple group, he will give the House of Commons an opportunity of discussing the future policy of the British Government towards China?
§ Sir E. GREYThere are several opportunities during the Session for discussing foreign affairs, and it is for the House to decide what use is to be made of them.