CHINA. 



125 



military act without the previous consent of the 

 < ;cniian Government. In particular he promises to 

 oppose no obstacle to the regulation of the water 

 courses. The lease embraces the territory on both 

 sides of the entrance to the bay, where Germany 

 undertakes to construct fortifications for the protec- 

 tion of the buildings to be erected for repairing and 

 ^quipping ships and storing materials and supplies 

 for them. Chinese ships of war and merchant- 

 men will have the same facilities for entering and 

 leaving Kiauchau Bay that may be extended to the 

 shipping of other nations and will be subject only to 

 the same dues. The delimitation of the customs 

 boundary and the levying of customs were left to be 

 arranged by future agreement in such manner as to 

 preserve all the interests of China. In a secret 

 agreement China granted commercial and industrial 

 concessions and monopolies to Germany covering 

 the whole peninsula of Shantung. Marines were 

 brought on transports from Germany until the gar- 

 rison numbered 3,000. ^The killing of a German 

 sentry on Jan. 24 at Tsimo, in the neutral zone, 30 

 miles from Ching-Tau-Kau, the German headquar- 

 ters, was made the ground for demanding another 

 railroad concession. The administration of the 

 Kiauchau territory war intrusted to the German 

 Naval Department. The railroad concessions were 

 for lines from Kiauchau to Tsi-Nang-Fu and to 

 Ichau, near the border of Kiangsu, and for a third 

 line connecting the two. These railroads, which 

 will have a total length of 700 miles and will cost 

 about 90,000,000 marks, are to be connected with 

 the projected Chinese trunk line, and they will tap 

 the Weih-Sien and Poshan coal fields, the working 

 of which is granted to Germans. In the province 

 of Shansi a German syndicate had obtained conces- 

 sions of coal and iron mines, petroleum, and tar 

 deposits. Capt. Rosendahl was appointed Governor 

 of Kiauchau and commander of the naval forces 

 there. 



In reply to the inquiries of the British ambassa- 

 dor, the German Minister of Foreign Affairs, Herr 

 von Billow, on Jan. 28 said that he was convinced 

 that Kiauchau would be opened to the commerce of 

 the world, that the German Government shared the 

 English view of colonization and believed that sys- 

 tem to be the best in the interests of the colonies 

 themselves. This was interpreted by the English 

 as an assurance that it would be made a free port 

 like Hong- Kong. The English Government, just be- 

 fore occupying Wei-Hai-Wei, intimated that it had 

 no intention of injuring or of calling in question 

 German rights or interests in the province of 

 Shantung, or of creating any difficulties for the 

 German Government; that in particular it did not 

 intend to lay down railroad communications with 

 the interior from Wei-Hai-Wei. When Prince 

 Heinrich of Prussia was received in audience he did 

 not, like European princes and envoys heretofore, 

 have to prostrate himself in humble kowtow as a sup- 

 pliant vassal, below eighteen rows of Chinese nobles 

 and officials of descending ranks, before the Em- 

 peror, sitting aloft, veiled in clouds of incense, within 

 the dim recesses of the gorgeous Hall of Harmony. 

 He was received by Kwangsu and the dowager 

 Empress in the Summer Palace on apparently equal 

 terms. 



Loan Negotiations. China applied for financial 

 advice and aid to the British, Russian, and other 

 governments to enable her to .raise the money to 

 meet the last installment of the Japanese war indem- 

 nity and secure the evacuation of Wei-Hai-Wei, 

 which the Japanese held as a pledge until the debt 

 should be finally paid. Japan, on account of her 

 own financial difficulties, pressed for a prompt pay- 

 ment of the balance. 



The British Government offered to provide a loan. 



of 12,000,000 at par to run fifty years, at an an- 

 nual rate of 4 per cent., including interest and sink- 

 ing fund. The conditions attached to the loan 

 were, besides a lien on the unpledged customs reve- 

 nues and certain likin duties in the event of de- 

 fault, that all the rivers and inland waters of China 

 be thrown open to free steam navigation ; that 

 Talienwan, Siang-Yin, or Yuen-Chau-Fu in Hunan, 

 and Nanning should be opened as treaty ports; 

 that the Chinese Government should enter into a 

 covenant with Great Britain never to alienate any 

 part of the Yangtse-Kiang valley to any other 

 power. As the opening of Talienwan to 'foreign 

 commerce would checkmate Russia's design to ob- 

 tain possession of that port as the southern termi- 

 nus of the Trans-Siberian Railroad, the British 

 proposal aroused the most active opposition on 

 the part of Russia. For similar political reasons 

 France regarded the proposed opening of Nanning 

 as designed to hem in the expansion of her influ- 

 ence in the south. It is close to the border of Ton- 

 quin, in the province of Kwangsi, on an important 

 southern tributary of the Si-Kiang, or West river, 

 the free navigation of which had been long resisted 

 by the French Government in opposition to British 

 demands. The Russian charge d'affaires, M. Pav- 

 loff, threatened reprisals and the withdrawal of 

 Russia's friendship and protection if China should 

 make Talienwan an open port. The Japanese 

 minister supported the British demands. M. Pav- 

 loff offered to provide a loan guaranteed by the 

 Russian Government on terms as favorable as those 

 offered by the British Government. He was sup- 

 ported by M. M. Dubail, French charge d'affaires, 

 and French banks offered to provide a part of the 

 funds. The Chinese Government, deterred by Rus- 

 sian menaces and for fear of English resentment 

 from accepting either offer, approached the two 

 governments with the suggestion of a compromise 

 whereby each power would provide one half of the 

 loan on its own financial terms, the other conditions 

 to _be adjusted by agreement between the two 

 powers. In their answer on Jan. 31 to Sir Claude 

 MacDonald the Tsung-li-Yamen said that Russia 

 had used such threats that they saw no way out of 

 the difficulty but coming to an arrangement with 

 Japan and borrowing neither from England nor 

 Russia. They said that a promise of protection 

 against Russia was the only thing that would help 

 them. The proposal to divide the loan with Great 

 Britain was rejected by Russia. The Chinese Gov- 

 ernment authorized an internal loan of 100,000,000 

 taels, which met with no response. Japan could 

 not be induced to postpone the date of payment. 

 At length, in the latter part of February, a loan of 

 16,000,000 was arranged with the Shanghai and 

 Hong-Kong Banking Corporation and the German 

 Asiatic Bank, to be taken at 90 and pay 44 per 

 cent, interest, redeemable in forty-five years by 

 means of a sinking fund. It is secured on the un- 

 pledged customs, estimated at 3,000,000 taels a 

 year, and on the likin of certain districts and ports 

 of the Yangtse valley and the province of Cheki- 

 ang and the salt likin of certain districts, which 

 are placed under the control of the maritime cus- 

 toms. These likin revenues are estimated at 5,000.- 

 000 taels, making the total hypothecated revenue 

 about 30 per cent, above the interest and sinking 

 fund of the loan, amounting to 835,232 annually. 

 The remaining portion of the Japanese indemnity, 

 amounting to 73,000,000 taels, or 119,000,000 yen, 

 was paid over on May 7 in a lump sum by the 

 transfer in London and Berlin of 12,008.857, the 

 value at the treaty rate of 39.48d. to the tael, the 

 market rate having fallen meanwhile to 33d. The 

 Japanese Government took 2,000,000 of the new 

 loan. 



