El Paso herald. (El Paso, Tex.) 1901-1931, 1913-01-20

the IepuDuc OF emma prellml-
nary loan of 1925, 10000 indicates
the passing of the present fl
nancial crisis. more threatening
than even political dangers, and sig
nalizeS the beginning of SAFE, stable
banking practices by the Chinese gov
eminent This, together with the fact
that the foreign bankers viii loan an
other S175, 900 within the next five
years, greatly encourages the friends
of China, even when it is well known
that the Chinese were bitterly opposed
to the terms Of the group and finally
accepted the situation because there
was absolutely no other sensible course
open to them.
Powerful Bankers in Group.
Great Britain, Germany, France, the
United States, Russia and Japan com
pose the six power group. The first
loan of $125,000,000 is appOrtiOned
among the six powers as follows;
Great Britain, S2O,OO0,O00; the United
States, $4,000, 900; France, $2O.O0O.0O0'
Germany, SIS, O0Os 900; Japan, $1,000
600, and Russia, S10,e00,000. The re-
naming $25,00O,O0O will go to c. Birch
Crisp & company, London bankers, who
for a time considered floating the en-
tire loan on their own Independent
account The most powerful banking
interests Of these countries make up
the group, and they have had the firm
and constant backing of their respec-
tive governments.
DOLLAR Diplomacy,
The story of the loan tangle in
China is an interesting one. So is
recital of the events which led the
American bankers to break into the far
eastern financial game, ultimately
pulling the state department in after
them The result so far has been the
material advancement of American in
terests and a stronger grip on the Chi
nese situation by the United States
government Critics have called this
dollar diplomacy" and a violation of
century-Old standards, but friends of
the administration hold with Lowell
that time makes ancient good IN
couth; new occasions teach new du-
ties"
American financial operations on a
really national scale began with China
in the summer of 1908, when Tang ShaO
vi, then governor of Manchuria, agreed
to loan of $50, 100000 from American
financiers. The money was to found a
great bank which was to back the
Chinese government in developing the
tremendous natural resources of Man
churia- Just prior to this, in May,
congress had authorized the return of
Americas snare OF the Boxer lndeIl-
nifty. Tang Shao VI was designated
special envoy to convey to Washing
ton Chlna'S hearty appreciation of this
generosity, but what lie was really sent
over here for was the floating of the
S2O,00C,00O Manchurian loan.
The Chinese Railway.
The United States was a party with
China to the commercial treaty OF
1903, providing for American assistance
in the abolition of the likin (an alb
nOX1OuS and haphaZard internal SyS
TEN of taXation) and revision of the
customs and currency reform In re-
turn China promised that Americans
would be permitted to put up One-haif
OF the capital IN the CanShudean OF
the HanROw-Szechuan railway line, the
other party being Great Britain. But
IN May, 1903. the American interests
discovered that British, French and
German capitalists were on the eve OF
concluding a nice little ARRANGEMENT
by which they would build the HUI
kuang railways, consisting of a trunk
line north from HankOW, the Chicago
OF China into SZechuan province, and
another south from HankoW to Can
ton The Americans then made three
strategic moves !, they stood upon
their rights in the commercial treaty
of 1903; ,, they brought forward the
new famous proposal for the neUtraliz-
alton of railroads in Manchuria, which
Japan and Russia rejected and which
the world laughed at awhile, a vecy
little while; 8, they concluded a purely
American loan with China Of $4,000
600, to be devoted to currency reform.
The American bankers were there
upon invited to share in the cOnStruc-
lion of the Hukuang railways and to
participate thereafter in the cOmbina-
ton which the other three nationals
had formed in 1909 for the fiOtatiOn Of
Chinese loans. November, 1910, saw
the entrance Of America into the ar
r2ngement which was thereafter re-
1erred to as the four power group.
Loan Refused During Revolt.
During the late revolution both Man
chGS and revOlutiOniStS were refused
financial aid by the four power group,
as their governments were anxious to
preserve strict neutrality. On Febru-
airy Is, 1912, however, by which time
it had been settled that a republican
form OF government would be tried,
with Yuan Shin ka1 as provisional
president, Tang Shao vi held a con-
ference in Pekin with the bankers He
asked for loan of 100000, 600, offer
ing official revenues as security, the
loan to be in five annual payments OF
$50. 0OO. 900 each. He also asked for
some money to meet the crisis at Nam
king and on the following day $780,
600 was advanced at Shanghai for the
Marking authorities. Another S6OO.OUO
was given Pekin officials on March 9,
the Cay before Yuan Shin K'ai was IN
auSurated. On the same day the
group signed the agreement to see
China through its difficulties, even to
paying Chinese loan interest coupon
charges, and in turn the Chinese gov
eminent promised the group an option
on the big loan, providing the terms
were as good as could be obtained
elsewhere
Money Secured in Belgium.
The next day, when Yuan Shin kai
became president, Tang Shao vi was
made premier. He had already induced
the group to advance S1,S00,0OO and
knew that they were preparing to take
care OF the entire S300,00,000 project
at his instigatiOn. Yet at the Same
time he was secretly negotiating
IS OOO. 900 loan from Belgian syndi-
cate. And five days after the agree
ment with the four power group had
been signed he closed with the Bel
gianc. GOT the S5,0O0,000, promised an
option on further loans and offered as
security the earnings of the Pek1n-hai-
can railroad, Notwithstanding the 1aCt
thai. the earnings of the same railroad
we've pledged in 1908 as security Tor
the Anglo-French loan of that year
The Belgians did not pay terms as hiGn
as the group offered, but they waved
the foreign audit and supervision pro
viso which the group insisted rang
then hurried to Marking and induced
the quasi-Ieeal advisory council 10 ap-
prove the Belgian loan. 1t mas Detn
generally believed that he did not IN
form that body Of his dealings with
the group.
Admitted Breach of Faith
A protest was made 10 days lateI DS
the British, French. German and Amer
lean ministers The explanation CT
misunderstanding" was rejected anu
negotiations were not resumed un-l
the government admitted formally IN
May that a breach Of faith had Deen