New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1912-11-15
DEFENDS S|X-POWER
GROUP IN CHINA LOAN
Willard Straight Gives Full His.
tory of Negotiations at the
Worcester Conference.
ACTING FOR THE BEST
Bankers Willing to Consider
Any Plan Chinese May Pro-
pose to Secure a Sound
Investment.
fRy Telegraph 20 The Tribune l

fBy Telegraph TO The Tribune
Worcester Mass. Nov 1i.-An exhaus
tive paper on "Chna's Loan Negota.
tions" was given this afternoon at the
conference at Clark University on reed
developments I'm China by Willarf
Straight. ex-consul general Of the Unite<
States in Mukden and representative IN
China Of the American banking group
Mr. Straight gave Chna's loan history
in great detail, from its beginning, imme-
diately after tho Chino-Japanese War,
down TO the present time. He praised the
dollar diplomacy" OF this country.
The loan negotiations Of this year are
gone over at length by Mr.. Straight. The
signing OF the Belgian loan is character
lied as a clear breach of contract. Mr.
Straight adds:
Properly 10 appreciate the problem Of
financing China at this time II is neces-
sary to summarize the factors which the
six groups were obliged TO take into con.
sideraton.
They had been requested by China 10
furnish roughly 10,0OO,c00 taels, or il.-
800, 900, a month for six months and 10
provide other sums, making the aggregate
amount to be advanced S0.00o,oOO taels,
or about 10000, 900.
IT would have been impossible 10 issue
Chinese loan at this time except az
figure so low as to prejudice the quota
lions OF Chinese bonds already on the
market, in the hands Of the public not Of
the groups. To furnish the sums imme-
diately required, therefore, the banks
would have been obliged TO discount
treasury bills which they would either
have 10 hold themselves or dispose Of 20
very limited clientele.
The Chinese government at this time
was powerless to collect the taxes which
1t offered as security and was unable 10
meet her indemnity and loan payments,
TO pay troops or to finance it's current
administrative expenses, and its per-
manence was by no means assured.
During the course OF the negotiations.
: from February to June, the Chinese Of
! ficials had shown little appreciation OF
the magnitude OF their financial task and
| eyinced little ability in dealing effectively
herewith while the then Premier, Tang
! Shao vi. had been guilty of bad faith.
| The groups, nevertheless, had advanced
| taels l2,l00OO0 in order 10 enable the ad-
| minlstration to meet its most urgent
mutinies which IL was feared would &C.
cur unless funds. which the government
could not secure from its own people
were obtained.
Obstacles Placed in Way.
These advances had been made subject
TO certain conditions 20 insure their
| proper application TO the purposes for
which they were borrowed yet the
| Chinese officials charged with their eX-
pendlture had placed every obstacle in
the way of proper and efficient audit, 20
which they had agreed.
Because of these facts the groups were
unwilling 10 undertake the business with.
out the joint support Of their respective
governments. Because OF these facts
moreover, they deemed it possible to pro-
coed with advances aud to undertake the
reorganization loan only on certain condi-
lions which were briefly as follows.
First-That the groups should have the
right to satisfy themselves as 70 purposes
for which funds were required.
Second-That China should herself create
system of audit in which foreigners
should be employed with definite. not
merely advisory, powers, 10 insure the ef-
! fectiye expenditure Of loan funds for the
! purposes specified.
Third-That the salt taxes 10 be hypoth-
! coated for the service of this loan should
! be administered either by the existing
maritime customs organization or BY
! separate Chinese service Ike the customs
| however, under foreign direction, thus
| safeguarding the proper administration
of the security despite the possible con-
! tinuation or recurrence Of unsettled con
! dtions In China.
Fourth-That the groups should take the
first series Of the loan OF e6o0O0,000, at a
fixed price, and be assured IN option on
! the subsequent series at a price 10 be
! based on the market quotation OF the
| first issue, thus giving China the benefit
! OF any Improvement In her credit.
| Fifth--That 10 protect the quotation Of
] bonds issued and TO assure a successful
marketing of subsequent series China
should not borrow through other groups
until the entire loan OF $50, 900 had been
! issued
Sixth-That for a period of FIVE years
| China should appoint tho groups hnan'
| cial agents to assist the administration
| in its work OF reorganization.
These conditions were submitted 10 the
| Chinese government, and In reply me
| group representatives I'm Picking were In
| formed that II would be impossible for
| China 10 accept a loan on such terms.
| tlnued were not formally broken of, and
| from the end of June discussions were
| continued between the Chinese officials
and the group representatives, but WITH
| out result.
Heavy Responsibility Felt.
After discussing the Crisp loan. Mr.
| Straight says in closing:
In these negotiations tho banking groups
4
responsibility. Their terms were SUP
mitted only after long and careful az.
| liberation. China's difficulties were fully
and alphabetically considered and the
conditions required by the groups were
| prepared I'm her interest as well as IN
the interests of the groups and the pros
| pective bondholders. -
| Recognizing, however, the peculiar diin-
cuties Of the present Picking government.
| the groups have throughout been wllllhs
| TO consider any plan which the Chinese
| themselves might propose, calculated 10
| free them from embarrassment, and az
the same time carrying with IL SAFE,
| guards sufficient 10 make any loan baseu
| thereon a sound investment.
| For the sake of the preservation OF
| China's integrity and the 'commerclai
! open door" IL is TO be hoped that some
mutually satisfactory understanding may
| be reached between China and the sh
Power group.
u