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Financial battle for Beijing: the great powers and loans to China, 1895-1898
The Historian. 79.3 (Fall 2017): p476+. From Student Edition.
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China's defeat in its war with Japan in 1894-1895 made the "Chinese question" an even more pressing one. It led to a significant expansion in the activities of the Great Powers in the Far East and transformed the financial situation for the Middle Kingdom. It is somewhat surprising to find that before the war, China did not owe much debt to foreign banks. During the relatively long period of 1861 to 1894, the Chinese borrowed a total of 12 [pounds sterling] million, most of which was made up of smaller sums toward military purposes, which were soon repaid. (1) The situation changed over the course of the war with Japan, which Beijing financed with the aid of four loans, amounting to a total sum of 6,635,000 [pounds sterling]. (2) Two-thirds of this sum was provided by Britain's Hong Kong and Shanghai Banking Corporation (HSBC), which played a key role in China's financial market for years. (3) The Bank of England refused to guarantee China's loans. (4) Even if he did not consider HSBC managers as "first class bankers," Inspector-General of China's Imperial Maritime Custom Service, Sir Robert Hart (1835-1911), brokered the operation. (5)

In financial terms, the defeat represented a true financial disaster for China, as the total war reparations for Japan as victors came to 230 million Kuping taels, roughly 35 [pounds sterling] million, an astronomical sum at the time, which Beijing had to pay in six repayments by 1901. (6) It was obvious that China would only be able to repay this debt by using foreign loans. Over the years from 1895 to 1898, Beijing acquired three large and two smaller loans to a total value of 49.8 million [pounds sterling]; when including interest, this sum rose to 54.5 million [pounds sterling]. (7)

The prospect of China having to get into massive debt on Western financial markets and find itself much more dependent on the European powers was initiated in the spring of 1895 by a process which can be termed without exaggeration the 'financial battle for Beijing,' whose key participants were Great Britain, Germany, Russia, and France, or, specifically, banking institutions within these countries. The sum which China was endeavoring to borrow led meanwhile to international cooperation and cash pooling in provisioning the loans. (8)

It became soon clear to all those involved in the battle that it was not just a financial or general economic issue, but a fundamental political matter providing the opportunity to have major, or even decisive, influence over Beijing and acquiring a tool to implement long-term economic objectives such as territorial expansion within China. Although Great Britain had shown great interest in China over the whole of the nineteenth century, the initial approach of Britain's political leaders to the 'Chinese Question' in the mid-1890s somewhat weakened the position of British financiers in competing internationally. In the spring of 1895 (following Gladstone's resignation in March 1894), the Liberals were in power in Britain with Lord Rosebery (1847-1929) as Prime Minister and Lord Kimberley (1826-1902) as Foreign Minister. Both politicians were well aware of the great interests that were in play and judged that Great Britain should be involved in providing loans to China. On the other hand, it took some time before they were willing to depart from the principle that had been applied for decades on which basis the British government did not get involved in private economic interests abroad, because

   in the 1890s the concept of laissez-faire still dominated the
   attitude of the Foreign Office to the question of overseas loans
   and investment. Unlike its European counterparts, the British
   government had no tradition of interference in the world of high
   finance, nor were there any formal channels of communication
   between the City and Foreign Office whereby a community of interest
   might be established on policies correlate. (9)

This fact proved to be a great disadvantage in a situation in which European governments were giving very strong support to the interests and activities of their countries' banks in regions outside Europe. According to information from the beginning of negotiations in April 1895, China's government needed a total of 40 million [pounds sterling], and by May they were already speaking of a sum of 50 million [pounds sterling] in negotiations. (10)

To begin with, the British government's position was significantly influenced by the belief that China would be unable to acquire such a huge sum without turning to the British financial market, and as such "the financial aspect of the struggle was not a matter of serious concern to Great Britain [for i]n the period 1870-1914 Great Britain was predominant in the field of international investment, and London was in effect the financial capital of the world." (11) Britain's initial somewhat self-assured approach was reinforced by other undoubtedly important facts. Britain's trading supremacy in China was absolutely undisputed, with Britain's influence connected with Sir Robert Hart's exclusive role at the head of China's Imperial Maritime Customs Service, which secured roughly a third of the Chinese state's tax income. Furthermore, soon after negotiations regarding the first indemnity loan had begun, Zongli Yamen ministers assured British envoy Nicholas O'Conor (1843-1908) that Britain would not be left out. (12)

China's government again turned to HSBC through Sir Robert Hart to ask if the bank could provide a loan to cover Japan's war reparations. Although the sum requested was exceptionally high, and some authors even claim that a loan that high had never before been provided, the bank expressed its willingness to do so, even if its management was convinced from the beginning that it would not happen without international cooperation and the support of the British government. (13)

By 7 May 1895, HSBC's London branch manager Ewen Cameron (1841-1908) informed the Permanent Under-Secretary at the Foreign Office, Thomas Sanderson (1841-1923), that cooperation with foreign banking institutions would be necessary. (14) Cameron was called to the Foreign Office in May 1895 to explain how the bank was going to secure the necessary funds, which was likely linked to Foreign Minister Kimberley's lack of faith in HSBC's ability to provide such a large loan alone. (15) At this occasion, Cameron declared that, if banks from the Continent were to provide the loan without British involvement, then Britain might lose control of Chinese maritime customs, which could undermine Britain's position in China and concomitantly weaken it throughout the whole of Asia. He also recommended that the British government advise China to limit the interference of other European powers in the working of the Imperial Maritime Customs Service. (16) On the one hand, Britain's Liberal government wanted to avoid increasing tensions in its relations with other powers, but, on the other hand, it wanted to ensure that the Far Eastern 'Triple Alliance' of Russia, France, and Germany did not transform itself into a tool for those countries to assert financial pressure on China and thus weaken Britain's position. (17) As such, Envoy O'Conor in Beijing was also instructed to issue a strong warning against accepting loans from banks in the above three countries to the exclusion of any other financial institution. (18)

To begin with, Prime Minister Rosebery was in favor of the idea that HSBC should supply the whole loan to China. But when he ascertained that this solution would come up against resistance from the Continental powers, he recommended that an international consortium provide the loan, in which the Rothschild banking house would help HSBC secure Britain's share. This was instigated by Lord Rothschild (1840-1918), who was the Prime Minister's in-law (Rosebery had been married to Hannah de Rothschild, 1851-90). Gradually, however, it emerged that the idea of a broad international loan with the participation of Great Britain had little chance of implementation. HSBC management first approached, unsuccesfully, to the German bank Disconto Gesellschaft, while no positive outcome came from talks with the governments in Paris and Berlin, who responded with great reserve to London's proposal. (19)

In many respects, the key to the solution was in St. Petersburg. Sergei Yul'evich Witte (Vitte, 1849-1915), Russian finance minister and author of the concept of Russia's 'peaceful penetration' of the Far East, originally rejected participation because he did not want to bind the Russian government to any kind of financial alliance. (20) France and Germany endeavored to reach an agreement with St. Petersburg regarding a loan to China, and reports appeared that the German Emperor supported further cooperation with Russia and France in China, while the loan should be jointly provided by the three Powers who had deprived Japan of some of the fruits of its victory a short while previously, thus opening a path for them to acquire control over Chinese customs' duties. (21) The Russians decided to make sure that British participation would not deprive them of the advantages gained through the Triple Intervention in April 1895. With this goal in mind they selected an appropriate strategy.

Britain's fundamental interest in China was to continue their exclusive control of China's maritime customs, and as such it consistently rejected any possibility of establishing international control. This was also the reason why Sir Robert Hart supported the idea of either HSBC or other British banks providing the whole loan to China, which would eliminate the threat of international control. It is often noted that "it was not the prime minister's wish to achieve a diplomatic triumph over France and Germany in the matter of the loan." (22) Rosebery was convinced that France and Germany would not attempt to cut Britain out of the whole affair and risk the possibility that the Chinese bonds might not be able to be placed on the British financial market, which would then remain closed to them. (23) On the other hand, the Foreign Office's stance was somewhat uncertain, which logically would have made Cameron nervous, having to wait carefully until his bank was guaranteed it would have the necessary funds available to it. He agreed with Undersecretary of State Thomas Sanderson (1841-1923) that Britain should not suffer failure regarding the loan and, until roughly mid-July, he hoped that French and German banks would join HSBC's offer. At that time, however, the influential undersecretary of state evidently did not share his optimism, stating with marked pessimism in a memorandum on 13 May 1895: "I think I had better ... tell him [Cameron], that if the Bank can manage the loan on the lines they wish we shall think they have done remarkably well[, but] we cannot take any part in the negotiations, as we should rouse international jealousies which would smash the whole transaction." (24)

The tense atmosphere aroused by actions regarding the loan contributed to the spread of false information. By chance, on the same day (18 May 1895), Cameron informed the Foreign Office that a decision on providing a Russian loan to China of 8 million [pounds sterling] had been made. (25) The same information was provided by Alfred Rothschild "in a tremendous state of excitement" to Foreign Minister Kimberley. (26) Cameron proposed an immediate firm solution: He recommended offering China a loan of 15 million [pounds sterling] with the option of acquiring another two loans of the same amount, to which he did not receive an official response. (27) The British foreign office was deeply concerned by the reports of the Russian loan and the possibility that Britain would be excluded from participation in the loan. Envoy O'Conor in Beijing was almost immediately instructed the following:

   Our information is that Russian Minister of Finance is offering a
   loan of eight to fifteen millions. We have heard a report that
   Chinese Government have accept for eight millions. German idea is
   said to be a loan of sixty millions of which ten millions be spent
   on orders. This would be ruinous and more than Customs revenue
   could pay. Chinese Government should understand that we expect to
   be treated with frankness and taken into confidence respecting
   matters which seriously affect our interests. (28)

The envoy immediately visited the Zongli Yamen, where he was once again assured that China had absolutely no intention of excluding Great Britain from participation in the loan. (29) Just two days later, on Lord Rothschild's instigation, Foreign Minister Kimberley telegraphed Beijing with the question of how much money China needed, and additionally asked whether the Chinese government was prepared to authorize the Rothschild banking house in London to determine the loan terms in an optimum way to ensure it could be dealt with internationally. (30) This question related to the fact that the Foreign Minister still preferred an "international solution" and was also, incorrectly as it proved, convinced that China could only acquire such a large loan in London. The government had clearly decided upon a more robust approach in negotiations with HSBC: Cameron was informed that the cabinet preferred a solution with the participation of the Rothschilds and would not tolerate any kind of attempts to exclude the banks of other countries. Cameron's response was indignant, but HSBC was left with little choice: It could either cooperate with the Rothschilds or try to act without government support. (31) Although Cameron was not particularly restrained or conciliatory in his letter to Sanderson of 22 May 1895, the bank was certainly not going to go against the official line. (32) As the memorandum of the British Government stated:

   The question of the loan which the Chinese Government will be
   obliged to raise is one of deep interest to Her Majesty's
   Government on account of the preponderance of its commercial
   interests in China. We are anxious least confusion may be caused by
   competing attempts to receive the loan.... They are assumed that it
   would not be possible to raise the full amount of the loan without
   the cooperation of the London market, that the desires of Her
   Majesty's Government is to secure a scheme which could be
   satisfactory to all parties concerned. (33)

Russian efforts to get the loan were ongoing during this time. Sometime at the end of May 1895, the Russian banker (and later general director of the Russo-Chinese Bank) Adolf Yul'evich Rothstein journeyed to western Europe as Witte's agent. His primary task was to ascertain the Paris Rothschilds' opinion regarding the loan, and as was deemed appropriate to meet with other French banks. (34) It is difficult to reconstruct the course of his mission, which lasted until mid-June, as there are few documents on his meetings available. Remarkable information is given in a confidential report of 8 June 1895 from the British envoy in Berlin, Edward Malet (1837-1908), to Lord Kimberley, the British foreign minister, in which he relays information he has been given by von Bleichroder, consul-general in Berlin, and one of the partners of the renowned banking house as well as confidant of the Rothschilds in Berlin. Von Bleichroder had conveyed to Malet that Rothstein, manager of St Petersburg's Banque Internationale and Witte's advisor, had travelled ten days previously to Paris, without stopping at Bleichroder's banking house, which he always regularly did. On 8 June, Bleichroder's house received a telegram from Paris stating that Rothstein had come to an agreement with the key French banking institutions Credit Lyonnais and Banque de Paris et des Pays Bas as well as other banks in regard to a loan to China to the sum of 16 million [pounds sterling], which the Russian government would guarantee. According to this information, the French Rothschilds refused to get involved, however, unless an agreement could be reached with British and German banking houses. (35) The message also said that on the morning of 8 June, von Hansemann, the director of the German Disconto Gesellschaft bank, visited the German foreign office where he was assured that the German government would be taking steps in Paris to thwart the undertaking, but that it was not going to intervene in St. Petersburg. (36) According to some sources, Rothstein was still in Paris on 30 May, but on 14 June 1895, a secretary at the British embassy in Berlin, Martin Gosselin, informed Foreign Minister Kimberley that he had travelled via Berlin back to St. Petersburg. (37) In any case, it was soon to be seen to what extent Britain would be taken aback by the outcome of Witte's agent's talks in Paris.

With respect to the French participation in the Chinese loan, by mid-May 1895 representatives of leading French banking houses had already met Foreign Minister Gabriel Hanotaux (1853-1944), informing him of their willingness to accommodate the government's interest, and participate in the loan provision. On Monday 27 May 1895, the Russian ambassador in Paris Baron Mohrenheim informed Hanotaux that the Chinese envoy in St. Petersburg had received official authorization to negotiate and asked for a statement as to whether French banking houses would take part in the local provision and relevant guarantees. (38) The French ambassador in St. Petersburg, the Marquis de Montebello, signaled that the Russian government clearly preferred the Chinese loan to be provided by a purely Russo-French syndicate. (39) Usually, this decision is explained as the outcome of both Russia's unwillingness to take part in a broader international undertaking which would determine the nature of its objectives in the Far East, and the resistance of French bankers together with Foreign Minister Hanotaux to cooperate with Germany.

The Germans welcomed the possibility of the British financial market taking part in the loan, especially the Rothschild banking house. Nonetheless, Germany's ambassador in London, Count Hatzfeldt, expressed his disquiet that provision of the loan would only be in the hands of the Rothschilds and said it was his opinion that it would be better if the whole operation was undertaken by an international syndicate. On 1 June 1895, Berlin received clear information on Rothstein's mission in Paris. (40) It had gradually become clear that St Petersburg and Paris were definitively not anticipating German involvement. On 3 June 1895, the Secretary of Britain's embassy in Berlin, Gosselin, announced that no decision by the government had been made to involve Germany. (41) The fifth of June 1895 appears to have been the turning point, when Russia in collaboration with leading French banking houses announced that it had made a firm offer to the Chinese government and that it would be purely a Russo-French undertaking. Furthermore, the conglomerate advised China to reject HSBC's offer, reasoning that Great Britain had done nothing for China since its defeat, in contrast to Russia, which, in collaboration with other European powers, had forced the Japanese victors to return the Liaodong Peninsula to China. Just under a month before signature of the contract on the Chinese loan, however, the head of Germany's Foreign Office, Marschall von Bieberstein, informed Secretary Gosselin of the British legation that Germany was not involved in the prepared loan and would not allow it to be placed on the German financial market. Britain promised to do the same. (42) On 24 June 1895 a last attempt was made to thwart the Russo-French consortium. Berlin and London continued, without success, to prefer an international solution to the problem. Following the rejection of the Paris Rothschilds of the idea of participating without British involvement, the Russian Foreign Minister Prince Lobanov had found a solution in cooperation with another group of French banks. (43) The British government was then somewhat caught by surprise at the speed with which the negotiations for the first loan came to a conclusion, with a syndicate of six French and four Russian banks providing a loan to China of 400 million Francs (15,820,000 [pounds sterling]) on 6 July 1895, which was to be paid back over 36 years with four per cent interest, a sum covered by the income from Chinese maritime customs and guaranteed by the Russian government. (44)

There is no doubt that Britain thus lost the first of the "financial battles for Beijing." Germany was also among those who lost, very frustrated by the behaviour of their former allies from the period of the so-called Triple Intervention, who had prevented involvement by German banks in the loan to the Chinese. It seems that Berlin somewhat belatedly realized that Russia was not anticipating German involvement in the loan offer. "We cannot discount the possibility that China will accept a loan of 16 million [pounds sterling] from Russia," wrote von Marschall, head of the German foreign office, to Envoy von Gutschmidt in Tokyo, one day after the loan agreement had already been signed. (45) "Mr.Witte ... has concluded a partial loan behind our backs," (46) complained the German ambassador in St. Petersburg, Prince von Radolin, in discussions with Prince Lobanov. Russia's foreign minister defended its collaboration with France by stating that "Russia was forced to take this unilateral step because the French were unwilling to take part in a loan with German involvement." (47) He noted furthermore that Emperor Wilhelm II had told Tsar Nicholas II in a letter that he would provide unqualified support for Russian policy in East Asia. (48)

Germany soon began to look for a way to achieve a rapprochement with Britain in strategizing further steps with regard to Chinese affairs. Acquiring the loan was above all a success for Russia, and it opened the way for implementing Witte's plan for "peaceful penetration" into China; the Russian minister had apparently even admitted in an interview with British ambassador Frank Lascelles that Russia was considering overall control of Chinese finances for the future. (49) The Russo-Chinese Bank was to be an important tool for implementing the Russian Foreign Minister's plan; this was a bank founded under Rothstein's supervision on 10 December 1895 in St. Petersburg, with abundant support from French banks. (50) The bank had extensive rights and besides standard financial operations was able to acquire railway concessions and finance line construction, mint its own coins, act as a trade commissioner, etc. (51) Franco-Russian co-operation in this regard was far from ideal, however; Foreign Minister Hanotaux and ambassador Gerard in Beijing found it difficult to tolerate the secondary role France played in the bank. They also found the disdain with which Russia dealt with France irritating, and they were often not informed in time of the political measures taken, which France was supporting financially. (52)

British failure led to a revival in discussions on whether, and, if so, in what way, the government should support British entrepreneurs abroad. The government was criticized for a lack of initiative and lukewarm support; some researchers are more sympathetic, noting the co-operation between the financiers and the foreign office. (53) The truth is, however, that compared to the continental powers, in this case France and Russia, the support provided to HSBC was limited and, as the battle for the first indemnity loan to China proved, insufficient. British ambassador in St. Petersburg Frank Lascelles stated, on the basis of information in Russia's influential Novoe Vremya newspaper, that Russia had already decided to offer China a government-guaranteed loan at the time Japan laid claim to Liaodong. (54) It was shown that London's options were limited, despite its long-term primacy in China. The British government was neither able to make Russia take part in a broad international act, nor did it have sufficient tools to force Beijing to reject the Russian terms. Furthermore, the idea that the government should support private activities abroad in a similar manner to how continental powers did this was still seen as contentious. HSBC's task was also peculiar in another respect, as no other British bank had expressed an interest in becoming involved in the loan to China.

Since the Russo-French loan did not come close to covering all China's needs in terms of repaying its war reparations to Japan, China realized it would have to acquire further funds from abroad. Britain saw a change in government at the end of June 1895, when Lord Salisbury's Conservative cabinet replaced the Liberal government; Salisbury (1830-1903) shortly took on the role of foreign minister in addition to that of prime minister. (55) Once the German banks had been excluded from participation in the first indemnity loan, meanwhile, Germany began to seek closer cooperation with Britain in regard to China, and fairly soon met with success. On the German side, the main role was played here by Deutsch-Asiatische Bank (DAB), a banking institution which had been founded on 12 February 1889 on the direct initiative of Berlin's Foreign Office by a consortium of twelve major German banks. The German government secured a lasting influence in the bank, which became an important tool for supporting German economic activities in the Far East, and it is not without reason that it is sometimes termed a "semi-state" institution. Its partner on the British side was HSBC. Talks between the banks bore fruit just three weeks after the Russo-French syndicate concluded its loan agreement with China. On 27 July 1895, representatives of both British and German banks signed an agreement on the joint provision of a loan to the Chinese government, or Chinese provincial authorities. The nature and extent of cooperation was clearly delineated. Were one of the banks to have the opportunity to conclude a deal with China and acquire the necessary guarantee, it was to offer participation to its partner under the same terms, with the agreement jointly signed. This wasn't just about participation in loan provision itself, but included financing of railway and telegraph construction or mining activities. The banks were to provide mutual support not just in China, but also elsewhere in Asia. Negotiations with the Chinese government were to be undertaken by a HSBC representative under the terms agreed by both parties.

If the final days of the Rosebery government in London had brought a partial improvement in cooperation between HSBC and the foreign office and the British government's traditional resistance to supporting private enterprise abroad had been overcome to a certain extent, with the arrival of Salisbury's Conservative cabinet conditions turned again less favorable. The new prime minister was informed of the nature and results of British-German talks and knew that the banks were going to cooperate on major projects in China, but he was not favorably disposed to the matter. In terms of the international situation, the veteran politician Salisbury had practically never desired any closer relations with Germany; he had always assessed situations in terms of British general imperial interests and for a long time his main objective had been improving relations with Russia. Furthermore, in an oft-repeated speech in Guildhall on 9 November 1895, he repeated the famed Disraeli statement that "in Asia there is room for us all." (56) The same statement was once more used by Conservative Parlimanetary leader Arthur Balfour (1848-1930) in Bristol on 15 January 1896. (57) It is thus no surprise that the British foreign office was not involved in the establishment of the above detailed alliance of banks, and, in fact, it did not even know the wording of the mutual agreement until 1905. In contrast, the German government directly commented on the wording and ensured it was in firm control of DAB.

Negotiations on China's second loan to cover Japan's war reparations began at the end of 1895. Britain knew that it could not afford another failure, and so cooperation and contacts between HSBC and its foreign office were stepped up again. The British legation in Beijing made great efforts, as did HSBC's special agent, E.G. Hillier, who represented the British and German bank in talks in the Chinese capital, and who submitted a memorandum to the Zongli Yamen on 11 January 1895 with information on the proposed Anglo-German loan. (58) An important additional role was certainly played by the support provided by Sir Robert Hart, who was well aware of the danger any second Russo-French loan would have for Britain's position in China, in particular in regard to managing maritime customs. Agent J.D. Campbell lobbied the British government on behalf of the Anglo-German group. (59) The British legation in Beijing's charge d'affaires Beauclerk also held important discussions at the Zongli Yamen. (60) Beauclerk explained to his Chinese interlocutors that talks on the loan were somewhat protracted due to the current situation on Europe's financial market. (61) Meanwhile, he conducted some meetings together with German envoy von Schenck. (62) Hesitation by China's ministers in mid-February 1896 complicated the situation so much that HSBC decided to suspend talks. At that time, China asked Beauclerk for assistance, who repeatedly stressed that the Chinese had already undertaken to accept a loan of 16 million [pounds sterling] from the Anglo-German group and were now obliged to keep their promise. (63) Beauclerk's firm dealings proved to be of great importance for the Anglo-German group, as at the time their competitors were also operating in the Chinese capital. On 12 February, HSBC's agent informed Beauclerk that he had received a report from London that an offer for a loan of 4 million [pounds sterling]had been made to China by the American bank J.S. Morgan & Co. (64)

Britain's charge d'affaires received even more disturbing information while visiting the probably most influential of China's politicians, Grand Secretary Marquis Li Hongzhang (1823-1901) on 17 February 1896. Li informed Beauclerk of his talks with the French envoy, August Gerard, who had recommended to the Paris government that a syndicate of French banks be formed which could offer China another large loan. (65) In his memoirs, Gerard also says that by the beginning of January 1896, Russia's Finance Minister Witte had offered a further loan to China in which besides Russia and France, Germany and Holland would also participate, but that French banks had not expressed interest in this proposal. (66) On the same day that Li met Gerard, the American envoy Charles Harvey Denby (1830-1904) visited the Zongli Yamen and offered a loan of 16 million [pounds sterling] in the name of his government to the surprised Chinese. (67) On 19 February 1896, Beauclerk, Hillier, and Schenck held a long discussion on the activities of their competitors, in particular the steps taken by the French envoy. Hillier and Schenck clearly had major doubts and worries, and as such recommended dealing with the situation by cooperating with the French. But they were unable to do so when his London headquarters told Hillier that cooperation with the French syndicate was out of the question, and, in a similar way, Germany's foreign office instructed Schenck to negotiate and cooperate only with the British. (68)

At the beginning of March 1896, French activities were still ongoing regarding the loan, but, somewhat surprisingly, this time they were not supported by Russia. (69) Although the London press signaled that talks between the Anglo-German syndicate and China had ended on 9 March, it wasn't until two days later that the preliminary loan agreement was signed, which was sanctioned three days later by an imperial decree. (70) Almost immediately following this, the head of HSBC's London branch, Ewen Cameron, began to seek out government support for the loan being registered by the Bank of England and placed in London's financial market. If this were not to happen, the Germans could give the loan special status on their financial market and gain the advantage in the whole matter. Although the interests of the bank and the government were essentially the same with respect to Britain's position in China, Cameron's efforts came up against resistance from the Chancellor of the Exchequer, Sir Michael Hicks Beach (1837-1916), who was strongly opposed to government support for private financial operations, declaring that he had "complete mistrust of these Loan Syndicates." (71) Hicks Beach considered himself a "guardian of financial morals" and he was unsympathetic to the fact that "political necessity was bringing a widening official involvement in financial and economic policy[, while] Salisbury shared much of Hicks Beach's view as to the proper relations between finance and government, but he gave primacy now to the political considerations." (72) In the end, his resistance was overcome and the Bank of England gave its approval to the loan registration on 26 March 1896.

E.G. Hillier (for HSBC) and Franz Urbig (for DAB) signed the final document in Beijing on 23 March 1896. (73) The syndicate was to lend China 16 million [pounds sterling], against five per cent interest; the loan was repayable over 36 years, with income from maritime customs serving as the source for its payments. Although Chinese negotiators complained of the severity of the agreement's terms, some authors are of the opinion that Britain and Germany gave China somewhat more favorable terms compared to the first Russo-French group loan, due to Gerard's maneuvering and the American offer. (74) If we compare both documents, however, it is hard to find very large differences. For Britain and Germany, conclusion of China's second loan for its indemnity to Japan was of vital importance. Above all, they had managed to balance out the consequences of the first loan provided by the Russo-French syndicate, although some British politicians were not keen on supporting private financial activities abroad. But the foreign office found HSBC a useful tool for promoting British political objectives in China and while the bank formed a positive relationship with Sir Robert Hart, its co-operation with the British legation in Beijing was proceeding very positively.

Beijing had clearly decided to eliminate its liabilities towards Japan as soon as possible. Discussions on China's third and final large loan to pay its indemnity began in February 1897, when Li Hongzhang asked HSBC, which was still co-operating with DAB, for a further loan of 16 million [pounds sterling] with an interest rate not to exceed five per cent annually. (75) Negotiations were complicated and protracted, mainly because of the issue of a collateral. Li offered income from maritime customs and land tax as surety, which at the time provided half the Chinese state's fiscal income. Germany in particular demanded a partial revision to the customs tariff and greater control over the securities offered, whether from part of the income from the internal tax (likin), or from the salt tax, which would have given them control over the maritime taxes inspectorate in regard to the loan. Should this demand not be met, representatives of both banks suggested, it would be difficult to place the loan on the British or German financial markets. On 2 June 1897, Li Hongzhang submitted the final offer of security for the loan, which was to be covered by income from maritime taxes, requesting 16 million [pounds sterling] at five per cent annual interest with a repayment period of 50 years. He rejected offering any further securities, something which the syndicate considered essential. Negotiations came to a halt for a time as a result.

Li then attempted to acquire funds from other private sources, meeting with an unspecified syndicate whose representatives were one Ernest Hooley and a Major Eustace Jameson. Although a preliminary agreement for a loan of 16 million [pounds sterling] was concluded, this syndicate was unable to deposit even the 100 000 [pounds sterling] required as a guarantee for realizing the loan. (76)

In terms of the Great Powers competing in China, the German occupation of Jiaozhou in November 1897 and the concomitant presence of Russian warships in Port Arthur complicated the situation. This became undoubtedly one of the triggers for the battle for concessions and defining spheres of influence, and further had an impact on further loan talks. The increasingly embattled Li Hongzhang once again turned to the Anglo-German syndicate, expressing a greater level of accommodation. He again proposed likin and salt tax as security, and in contrast to his previous stance agreed that, subsequent to the repayment period, these sources could be controlled by foreigners. (77) Just when it appeared the issue of security had been dealt with, Germany intervened in developments in an unforeseen manner. It proposed that a British and German inspector for control of the Chinese taxes in question be named immediately. It further demanded that France be involved in the loan as an equal partner, and proposed that following their consent Russians could also be involved in the loan, while an international financial commission similar to that which worked in Egypt was founded. (78) These proposals clearly did not particularly suit Great Britain or Russia, the principal rivals in China. Britain's primary interest was trade and in this regard it preferred that its privileged positions be preserved, such as its control of Chinese maritime customs. It consistently rejected the creation of any international institution which would endanger its exclusive control. Russia's final objective was undoubtedly the assertion of its exclusive influence in north China, and as such it was hardly going to favor any form of international controls either.

The situation seemed to escalate in the last days of 1897. During the evening of 21 December 1897, British envoy MacDonald received a report that Russia's charge d'affaires had offered China a loan of 16 million [pounds sterling] at four per cent interest, secured through land tax revenue and income from likin, and guaranteed by the Russian government. In exchange, Russia was to receive a monopoly in the construction of all railways and operation of mines in Manchuria and northern China, and the promise that Sir Robert Hart's successor in the role of inspector-general at the Imperial maritime customs service would be Russian. (79) Although Britain's envoy did not at first consider the information reliable, it was eventually confirmed as accurate by the Zongli Yamen and HSBC manager Ewen Cameron. If Russia's terms for this loan were to be met, this appeared to constitute a major blow to Britain's massive trading interests in China. (80) At this time (the data here apply to 1898), the British Empire contributed 56.5 per cent toward the total income China derived from maritime customs, which was a full 74.03 per cent of total income it received from foreign countries. In comparison, Russia's share was negligible, for it contributed just 1.63 per cent of total customs' income and 2.14 per cent of total income from foreign countries. Britain's predominance in goods transport to China was also vast, for, of a total of 34,326,580 tons of goods that were transported to China, British carriers carried 21,365,966 tons and Russian ships a mere 178,768 tons. (81)

It seems that in this situation of suddenly sharp tension between the Western Powers, China was resorting to a complex game whose outcome was meant to be more favorable terms for China. As such, it asked MacDonald to find out within one week whether the Anglo-German syndicate was still prepared to look at China's offer from the end of the previous spring. It is clear the Chinese believed themselves to have a number of options, which allowed them room, if briefly, for maneuver. But it appears the Russians were well-informed, and, on 31 December 1897, MacDonald received a report that Russia's charge d'affaires had termed China's discussions with HSBC an expression of distrust towards Russia, and had withdrawn the loan offer. (82) On 2 January 1898, however, Britain's envoy met with Li Hongzhang, who assured him that the Russian proposal had in fact not been withdrawn and the loan terms still applied, of which he had been personally assured by Russian Finance Minister Witte. (83)

The uncertainty regarding China's loan disturbed HSBC management above all. Ewen Cameron in particular significantly increased his activities, well aware that the threat of China's acceptance of Russia's offer would be a harsh blow to HSBC's position and especially for Great Britain's general interests in China. Furthermore, Cameron had to face the possibility that in the end the British government might guarantee a loan provided by another bank. Before the year was out, HSBC proposed that it would secure the necessary sum if the British government provided just a partial interest guarantee of 1 to 1.5 per cent. (84) On 7 January 1898, Cameron visited Sir Francis Bertie (1844-1919), a key figure in the Foreign Office's Far East department, and attempted to summarize the essential arguments to persuade the government to support his bank. He stated that his financial institution had a good reputation in Britain and in the Far East, reminded Bertie of its great service in the development of British trade with China, and stressed that HSBC maintained very close relations with the Chinese government, enjoying its great trust. Should they not receive support, Cameron warned that:

   We will suffer great loss of prestige and our influence in the East
   will be seriously impaired. We are now fighting hard battle with
   Russian, French and German semi-state banks in China and I am proud
   to say we are more than holding our own. If, however, we are
   ignored by our Government in an important transaction like this,
   which legitimately comes within our field, our position will be
   very much damaged. (85)

From Beijing, MacDonald also supported the HSBC cause: "The Russian Bank here receives strong official support from Russian Government and competes strongly with our Bank for Chinese government business[; i]f left outside in this matter the position of Hongkong and Shanghai Bank would be seriously impaired in the eyes of the Chinese government." (86) The influential Sir Robert Hart further provided the bank support, but none of this was enough, for Chancellor of the Exchequer Hicks Beach opposed it and proposed dealing with the affair through a direct government loan to China and an agreement with Russia, which would achieve an understanding over interests in China. At a cabinet meeting on 28 December 1897, the chancellor even proposed providing a joint loan with Russia on the basis of a division of spheres of influence in China. Once China officially requested a loan from Britain on 5 January 1898, the London government approved the provision of a government loan of 12 million [pounds sterling], to be paid back from income from maritime and other customs duties, likin and salt tax, all of which were to be controlled by Britain; should the loan not be repaid, they would clearly become subject to full British control. (87) Beijing envoy MacDonald considered these demands too strong and warned they could arouse the resistance of the Chinese. (88)

China now had a dilemma to deal with. They needed a loan and were in receipt of two offers, one from Russia and one from the Anglo-German banks. Accepting one of the offers was certain to meet with a negative response from the other party. Britain's stance was clearly expressed by Chancellor of the Exchequer Hicks Beach in a speech to the Chamber of Commerce in Swansea on 17 January 1898, when he declared:

   We do not regard China as a place of conquest or acquisition by any
   European or any other Power. We look upon it as the most hopeful
   place of the future for the commerce of our country and the
   commerce of the world at large, and the Government was absolutely
   determined, at whatever cost, even ... if necessary, at the cost of
   war, that the door should not be shut against us. (89)

Some believe that Hicks Beach was declaring a kind of a Monroe Doctrine for China. (90) The requirement for China to remain open to trade essentially corresponded with the principles of the US Open-Door Policy toward the Middle Kingdom, which was first announced in a note dated 16 September 1899 by American Secretary of State John Hay. (91)

Russia's response came soon, on 25 January 1898, when Russian envoy in Beijing Cassini strongly protested against the British loan offer, arguing that it "would disturb the balance of influence in China." (92) French envoy Gerard responded similarly. Hicks Beach's unusually open statement as a member of government also worried Russian ambassador in London Baron Egor Staal (1822-1907), who referred Foreign Minister Mikhail Muravyov (1845-1900) in a letter to the fact that the British chancellor "used the word war in public discussion." (93) At the time, MacDonald in Beijing had to confront not just the outcome of Russian threats, but also the impact of bribes to Chinese dignitaries, which allegedly reached millions of rubles. (94)

In terms of the next step, Britain displayed extraordinary differences in opinion. Prime Minister Salisbury continued to prefer the option of normalizing its relations with Russia, not just in China, but in non-European territories in general. In this vein, he instructed Ambassador O'Conor in St. Petersburg on 17 January 1898:

   If practicable ask Monsieur Witte whether it is possible that
   England and Russia should work together in China. Our objects are
   not antagonistic in any serious degree: on the other hand we can
   both of us do each other a great deal of harm if we try. It is
   better therefore we should come to an understanding. We would go
   far to further Russian commercial objects in the North, if we could
   regard her as willing to work with us. (95)

The prime minister's accommodation went fairly far; Salisbury even implied the possibility that in respecting Russian interests, Britain would not insist that Dalian in Manchuria become an open treaty port, something which had been one of Britain's requirements for providing the loan. (96) On the other hand, Salisbury realized that some kind of "positive act" had to be undertaken, otherwise the Chinese fiscal administration might "fall into unfriendly hands to the serious detriment of our trade." (97) Furthermore, he had to take public opinion in Britain into account, which clearly rejected any kind of concessions to Russia. (98)

It is interesting to note the position of Chancellor of the Exchequer Hicks Beach, who continued to resist any eventual government support for private entities abroad, recommending any Chinese loan be provided directly by the government; he even considered a joint British and Russian loan and agreed with Salisbury that an agreement with St. Petersburg should be sought out.

In terms of the Foreign Office's position, influential figures such as Permanent Under-Secretary Sanderson and Francis Bertie clearly preferred supporting HSBC, which they considered an incredibly important tool for promoting British interests in China. They recommended providing the necessary political support to it. Although Envoy MacDonald in Beijing usually strove to strongly promote British interests, pressure from the Russians and the behavior of Chinese dignitaries gradually turned him towards the idea that an understanding with Russia in accordance with Salisbury's idea was necessary to maintain British positions in China. (99)

In terms of the British attempt to succeed in competing for the loan and maintaining its influence in China, Salisbury's initiative focusing on an understanding with Russia at the beginning of 1898 came too late. Other interested parties, especially Russia, were strongly affected by Germany's occupation of Jiaozhou in November 1897, and from that time had begun to clearly consider promoting their interests by defining a sphere of influence in which they would hold an exclusive position, which in itself was completely at odds with Britain's concept based on free trade principles and the opinion that China was a "place for everyone." Britain's ambassador in St. Petersburg, Sir Nicholas O'Conor, became convinced of this during talks he held in the second half of January 1898 with Russian politicians. In an interview on 19 January 1898, Foreign Minister Muravyov expressed his sympathies for an agreement with Britain which would, however, as he saw it, lead to a defining of spheres of influence; in this regard he said that Russian's field of interest was the whole of northern China from Beijing and Tianjin northwards, naturally including the whole of Manchuria. (100)

Three days later, the British diplomat met with Finance Minister Witte, who expressed his disagreement with annexing part of Chinese territory, and declared that "Russia's geographical position must sooner or later secure her political predominance in the North of China and her true policy is to keep China intact." (101) The Russian minister expressed his differences with Britain's perspective in this way. O'Conor must have been unpleasantly surprised when Witte further informed him that Russia aimed at the future absorption of the Chinese provinces of Zhili, Shanxi, Shaanxi, and Gansu and planned to construct a branch of the Trans-Siberian Railway to the city of Lanzhou, the capital of Gansu. (102)

By the end of January 1898, China had still not responded to Britain's loan offer, and Envoy MacDonald correctly assumed that this was the result of Russian pressure. Under these circumstances, under the threat of Russian banks providing the loan to China, Salisbury decided to determine the compensation which London would demand from China if this were to occur. This included a concession for building the so-called Burma Railway from the border of Burma to the Yangzi river, free steam navigation along Chinese rivers, and cession of the Choushan Islands to the United Kingdom. Salisbury stated that, "These things China must grant if she accepts the loan from Russia, and, if she refuses, we shall take them." (103) In the British press it was suggested that the continued Russian pressure in China called for Great Britain to hold firm to these demands, for backing away from them would result in a great loss of prestige. (104)

Fears of Russia forced China to reject the offer of a British government loan. (105) On 3 February 1898, Prince Gong informed Envoy MacDonald that Russia was threatening Beijing in such a way that China could not accept Britain s offer. (106) Salisbury sent a telegram to O'Conor in St. Petersburg on 8 February 1898 stating that "Li Hung Chang has informed us through the Chinese Minister that China has been compelled by the menaces of Russia to refuse the loan." (107) Only negotiations on a loan to be provided by private banks were to continue, which opened up a new opportunity for HSBC, or specifically for the Anglo-German syndicate, with whom Li Hongzhang renewed talks. It was clear that the bank would be unable to acquire direct government support, and so the bank strove to get the Bank of England somehow involved in the loan. The problem was that in the light of the complex situation in China, some kind of government guarantee for the Chinese loan was necessary. If the British government were not to provide this guarantee, it was likely that Beijing would have to turn to Russia: The St. Petersburg government would undoubtedly provide that guarantee immediately. (108)

Of crucial importance in the developments was the preliminary agreement on a loan for 16 million [pounds sterling], which Li Hongzhang concluded with representatives of the Anglo-German group on 19 February 1898. It strongly boosted Cameron's bargaining position. The question remains as to whether, and to what extent, the fact that the Russians had demanded the lease of Port Arthur and Dalian in Manchuria for a period of twenty years as a condition for providing the loan influenced the Chinese politician's decision. In an interview with Britain's Ambassador O'Conor, then deputy Russian Foreign Minister Count Vladimir Lamsdorf (1845-1907) declared that "this lease would not destroy Chinese sovereignty," but he admitted that Russia was determined to hold the ports "at any costs," while the ambassador's objection that "the possession of such a strong military position as Port Arthur would radically alter the condition of things" was left without a response. (109) Russia's ambassador in London, Baron Staal, warned of the unfavorable impact of the fact that these ports would not be open because, because "other ports on the Chinese coast ... are open to international trade and battleships," but his opinion did not result in a change of approach from St. Petersburg. (110)

Systematic pressure was being placed on Beijing by MacDonald. During February 1898, he continued to demand the same: trade concessions, a promise that China would not accede any territory in the Yangzi Valley to anyone, a treaty port would be opened in the province of Hunan, while a Briton was to remain Inspector-General of Chinese customs, if Britain remained China's foremost trading partner. MacDonald explained in the Zongli Yamen that the concessions demanded should not be considered as compensation for any failure in the matter of the loan. In the end, China met most of the submitted demands, and state undersecretary at the Foreign Office Lord Curzon was able to inform the House of Commons of this on 25 February 1898. (111)

On 22 February 1898, the London Times stated that loan negotiations were ongoing. The actual agreement between the Anglo-German syndicate and China was signed on 1 March 1898 and amounted to 16 million [pounds sterling] at four-and-a-half per cent interest to be repaid over 45 years. (112) Besides the standard surety of income from maritime customs duties, the loan was also secured through income from internal customs (likin) in a number of cities on the Yangzi and part of the province of Zhejiang, and salt tax in the provinces of Hubei and Anhui and the city of Yichang. (113)

Fundamental here was the fact that Chinese officials entrusted with the collection of the taxes in question were transferred to the authority of the Inspector-General of the Chinese Imperial Customs Service, Sir Robert Hart. On the same day the loan agreement was signed, a debate took place in London's parliament on what policy the British government should pursue in China. It was declared that "it is of vital importance for British commerce and influence that the independence of Chinese territory should be maintained." (114) During the discussion, Curzon responded to the numerous queries from MPs. His responses clearly expressed the government position:

   The integrity and independence of China are matters of intense
   solicitude to the Government, as they must be to any British
   Government, and that they may be considered to be cardinal bases of
   our policy with reference to that country ... we are therefore
   opposed to the alienation of any portion of Chinese territory, or
   to the sacrifice of any part of Chinese independence. (115)

St. Petersburg responded to the situation almost immediately. Russia submitted extremely tough demands to the Zongli Yamen, to which Beijing in the end submitted. (116)

The agreement on China's last large loan for its indemnity to Japan was a clear success for Britain and Salisbury's policy, which until then had aroused frequent doubts, including from some members of his own cabinet. What were the reasons for this success? There is no doubt these were Cameron's persistence and dexterity, the HSBC's contacts within the Chinese government, and the support provided by London's Rothschild banking house in the matter. A key role was played by Sir Robert Hart in the matter.

The endeavors made by envoy Sir Claude MacDonald in Beijing were exceptional, too. One can fully agree with the opinion that

   ... thanks to MacDonald's aggressive strategy, Britain had turned a
   political and diplomatic defeat into victory in the struggle for
   financial hegemony in China. British-owned banks and financial
   partnerships had supplied several war loans and two of the three
   major indemnity loans.... MacDonald used the loans to obtain
   numerous trade concessions for British merchants. He aggressively
   applied Salisbury's consistent commercial policy in China. (117)

Traditional methods applied in government, for example, by Hicks Beach, or British foreign-office representatives, could not hold up when faced with the new situation which had occurred in China. In contrast, people such as Thomas Sanderson and Francis Bertie realized in time to what extent trade and particularly financial affairs had taken on political importance.

Dr. Ales Skrivan Sr., is a professor at the Institute at the Institute of World History within the Faculty of Arts of Charles University in Prague. His son, Dr. Ales Skrivan, is a professor in the Department of Economic History of the Faculty of Economics and Public Administration of the University of Economics in Prague.

(1.) Leonard K. Young, British Policy in China, 1892-1902, Oxford: Clarendon Press 1970, 26.

(2.) The National Archives, Kew [from here: TNA), Foreign Office [from here: FO] 17 China/1232, Political and other Departments, General Correspondence before 1906, Diplomatic despatches, O'Conor to Kimberley, No. 9 (Peking, 10 January 1895). The British envoy informed the Foreign Minister of receipt of the loans from the Hong Kong and Shanghai Banking Corporation and issuance of the relevant imperial decree; on the sum total, see Young, British Policy, 27. Morse says that China borrowed 6,750,000 [pounds sterling] for the war (see Hosea Ballou Morse, The International Relations of the Chinese Empire, vol. 3: The Period of Subjection, 1894-1911, London: Longman, Green and Co. 1918, 53).

(3.) This involved a total of 4,635,000 [pounds sterling]. Great Britain (Hongkong and Shanghai Banking Corporation) & China. Final Agreement for Chinese Imperial Government, 7% Silver Loan of 1894, January 26, 1895, in John V.A. MacMurray, ed., Treaties and Agreements with and Concerning China 1894-1919, vol. 1, New York: Oxford UP 1921, 11; Great Britain (Hongkong and Shanghai Banking Corporation) & China. Final Agreement for Chinese Imperial Government 6% Sterling Loan of 1895, 26 January 1895, in MacMurray, ed., Treaties, vol. 1, 15.

(4.) Thomas G. Otte, China Question. Great Power Rivalry and British Isolation, 1894-1905, Oxford, New York: Oxford UP 2007, 75.

(5.) E.W. Edwards, British Diplomacy and Finance in China, 1895-1914, Oxford: Clarendon Press 1987, 9; Otte, China Question, 75.

(6.) Including other payments to Japan, China's liabilities came to a total of 250 million Kuping taels, or 38 million [pounds sterling] (see C. M, Hou, Foreign Investments and Economic Development in China, 1840-1937, Cambridge, MA: Harvard UP, 1965, 23-4; Otte, China Question, 74).

(7.) Young, British Policy, 27.

(8.) TNA, FO 17 China/1235, Diplomatic despatches, O'Conor to Kimberley, No. 184, secret (Peking, 22 May 1895). The British envoy informed the Foreign Minister that the Chinese were asking (just for the first loan) 100 million taels, i.e., 16 million [pounds sterling].

(9.) D. McLean, "The Foreign Office and the First Chinese Indemnity Loan, 1895," The Historical Journal 2, 1973, 303-21: 303.

(10.) Edwards, British Diplomacy, 10; McLean, Foreign Office, 304.

(11.) Young, British Policy, 27.

(12.) TNA, FO 17 China/1235, Diplomatic despatches, O'Conor to Kimberley, No. 183, secret, Peking, 18 May 1895. The British envoy provided information on his talk with Zongli Yamen minister Xu Dajen, who provided him with the assurance mentioned. Ibidem, O'Conor to Kimberley, No. 184, secret (Peking, 22 May 1895). Zongli Yamen: the Chinese government authority in charge of foreign affairs, specifically mediating communication between the imperial court and foreign envoys in Beijing. Its official name was "The Office in Charge of Affairs of All Nations." It was established in 1861 by Prince Kung and abolished in 1901, when it was replaced by a standard Foreign Ministry.

(13.) McLean, Foreign Office, 304.

(14.) TNA, FO 17 China/1252, Various diplomatic, Cameron to Sanderson (London, 7 May 1895).

(15.) Otte, China Question, 77.

(16.) TNA, FO 17 China/1253, Various diplomatic, Cameron to Sanderson (London, 9 May 1895); ibid., Memo Cameron (London, 10 May 1895).

(17.) The joint diplomatic intervention of Russia, France, and Germany in Tokyo on 4 April 1895 resulted in the return of the Liaodong Peninsula to China, which it had originally lost on the basis of its peace treaty with Japan signed in Shimonoseki on 17 April 1895; the joint action has been termed the Far Eastern Triple Alliance (or also the Triple Intervention).

(18.) Otte, China Question, 76.

(19.) For the negotiations between the director of Disconto Gesellschaft, von Hansemann, with the A. M. Rothschild & Sons, see Politisches Archiv des Ausivartigen Amtes [from here: PA AA], China 3, Finanzen Chinas, Bd. 3, Von Hansemann an Rothschild Sons, Berlin, den 3. Mai 1895; ibid., Rothschild an Geheimrath von Hansemann, London, den 25. Mai 1895; ibid., Telegramm des Geheimraths von Hansemann an A. M. Rothschild & Sons vom 27. Mai 1895; ibid., Rothschild an Geheimrath von Hansemann, London, den 27. Mai 1895; ibid., Geheimrath von Hansemann an Rothschild, private, Berlin, den 28. Mai 1894.

(20.) For a more detailed explanation of Witte's stance see B.A. Romanov, Russia in Manchuria, 1892-1906, Ann Arbor, MI: American Council of Learned Societies, 1952, 65.

(21.) TNA, FO 17 China/1253, Various diplomatic, Memorandum by Sanderson, London, 10 May 1895.

(22.) McLean, Foreign Office, 307. Practically the same is said in Otte, China Question, 77.

(23.) TNA, FO 17 China/1253, Various diplomatic, Memorandum by Sanderson, London, 13 May 1895.

(24.) Ibid.

(25.) TNA, FO 17 China/1253, Various diplomatic, Cameron to Sanderson, London, 18 May 1895.

(26.) Otte, The China Question, 79.

(27.) McLean, The Foreign Office, 309.

(28.) TNA, FO 17 China/1242, Diplomatic drafts, Kimberley to O'Conor, London, 18 May 1895.

(29.) TNA, FO 17 China/1242, Diplomatic drafts, Cameron to Foreign Office, London, 18 May 1895.

(30.) TNA, FO 17 China/1253, Various diplomatic, Kimberley to O'Conor, London, 20 May

(31.) TNA, FO 17 China/1253, Various diplomatic, Cameron to Kimberley, London, 21 May 1895.

(32.) TNA, FO 17 China/1235, Diplomatic despatches, Cameron to Sanderson, London, 22 May 1895.

(33.) PA AA, China 3, Finanzen Chinas, Bd. 2, Britischer Botschafter Edward Malet an Marschall von Bieberstein, Berlin, den 22. Juli 1895.

(34.) Stanley Fowler Wright, Hart and Chinese Customs, Belfast: W. Mullan for the Queens University, 1950, 659.

(35.) According to some sources, Rothstein was to try to ascertain the Rothschilds' position (Wright, Hart, 659).

(36.) TNA, FO 64 Germany/1350, Malet to Kimberley, No. 140, Berlin, 8 June 1895.

(37.) Romanov, Russia, 67; TNA, FO 64 Germany/149, Martin Gosselin to Kimberley, Berlin, 14 June 1895. About the Rothstein's negotiations in Paris, see Lascelles Papers, FO 800/17, Lascelles to Sanderson, private, 26 May 1895.

(38.) Documents diplomatiques franqais [from here: DDF], Ire serie, tome XII, Mohrenheim a Hanotaux, Paris, le 27 mai 1895, 48.

(39.) Ibid., 50.

(40.) TNA, FO 17 China/1253, Various diplomatic, Memo Sanderson, London, 26 May 1895.

(41.) TNA, FO 64 Germany/1352. Martin Gosselin to Foreign Office, No. 23, Berlin, July 3, 1895.

(42.) Ibid., Martin Gosselin to Kimberley, No. 142, Berlin, 8 June 1895; ibid., Martin Gosselin to Kimberley, Berlin, 14 June 1895.

(43.) DDF, Ire serie, tome XII, Montebelo a Hanotaux, Petersbourg, le 2. juin 1895, 62.

(44.) The loan was approved in a special edict from China's Emperor on 1 July 1895, and the agreement was signed on 6 July 1895 in St Petersburg by China's Envoy Extraordinary and Minister Plenipotentiary Shu Dingcheng and a syndicate made up by representatives of the following banks (their share in million of French francs is given in brackets): M. M. Hottinguer (62.5 million); la Banque de Paris et des Pays-Bas (62.5), Credit Lyonnais (62.5); la Societe Generale pour favoriser le Development du Commerce et de l'lndustrie en France (25.0); le Comptoir National d'Escompte de Paris (25.0); La Societe Generale de Credit Industriel et Commerciel (12.5); la Banque Internationale de Commerce a St.-Petersbourg (75.0); la Banque Russe pour le Commerce Etranger (25.0); la Banque d' Escompte de St.-Petersbourg (25.0); la Banque de Commerce de Volga-Kama (25.0). For the wording of the agreement, see France & Russia (Franco-Russian Syndicate) & China. Contract for Chinese 4% Gold Loan of 1895, 6 July 1895 in MacMurray, ed., Treaties, vol. 1, 35-40. For more on the loan see William Leonard Langer, The Diplomacy of Imperialism 1890-1902. New York: Knopf, 1951, 188; Wright, Hart, 657-9; Morse, International Relations, 53-4.

(45.) Die Grosse Politik der Europaischen Kabinette 1871-1914. Sammlung der diplomatischen Akten des Auswartigen Amtes [from here: GP], Johannes Lepsius, Albrecht Mendelssohn Bartholdy und Friedrich Thimme eds, vol. 9, Der nahe und feme Osten; Berlin: Deutsche Verlagsgesellschaft fur Politik und Geschichte, 1923, Nr. 2276, Der Staatssekretar des Auswartigen Amtes Freiherr von Marschall an den Gesandte in Tokio Freiherrn von Gutschmidt, Telegramm Nr. 77, Berlin den 7. Juli 1895, 301.

(46.) GP, Bd. 9, Nr. 2290, Der Botschafter in Petersburg Furst Radolin an den Reichskanzler Fursten von Hohenlohe, Nr. 306, St. Petersburg, den 9. August 1895, 311-14.

(47.) Ibid., 313.

(48.) Ibid.

(49.) McLean, Foreign Office, 319.

(50.) The main bank support was provided by Banque de Paris et des Pays-Bas, Credit Lyonnais and Comptoir National d'Escompte de Paris. For more on the establishment of the RussoChinese Bank, see O. Crisp, "The Russo-Chinese Bank: An Episode in Franco-Russian Relations," Slavonic and East European Review, 52, April 1974, 197-212; Young, British Policy, 154.

(51.) Langer, Diplomacy, 397.

(52.) Edwards, British Diplomacy, 18.

(53.) McLean, Foreign Office, 320.

(54.) TNA, FO 65 Russia/1491, Lascelles to Kimberley. St Petersburg, 2 June 1895.

(55.) It wasn't until November 1900 that Lord Lansdowne took over the office of Foreign Minister.

(56.) As reported in The Times (of London), 10 November 1895, 1.

(57.) The Times, 4 February 1896, 1. For a more detailed explanation of this stance, see Philip Joseph, Foreign Diplomacy in China, 1894-1900: A Study in Political and Economic Relations with China, London: Allen & Unwin, 1928, 157.

(58.) TNA, FO 17 China/1275, Beauclerk to Salisbury, No. 30, confidential, Peking, 21 January 1896.

(59.) Edwards, British Diplomacy, 13.

(60.) Wiliam Nelthrope Beauclerk led Great Britain's legation in Beijing from September 1895 until 24 April 1896, when Sir Claude MacDonald became the new envoy.

(61.) TNA, FO 17 China/1275, Beauclerk to Tsungli Yamen, No. 4, Peking, 23 January 1896.

(62.) TNA, FO 17 China/1275, Beauclerk to Salisbury, No. 47, confidential, Peking, 3 February 1896.

(63.) TNA, FO 17 China/1275, Beauclerk to Salisbury, No. 61, confidential, Peking, 14 February 1896; ibid., Beauclerk to the Tsungli Yamen, No. 4. Peking, 12 February 1896.

(64.) TNA, FO 17 China/1275, Beauclerk to Salisbury, No. 61, confidential, Peking, 14 February 1896.

(65.) To the French activities with regard to the second loan, especially of envoy Gerard, see PA AA China 3, Finanzen Chinas, vol. 11, Julius Brussel an die Hongkong & Shanghai Banking Corporation. Telegram, Berlin, den 29. Februar 1896; ibid., Telegramm der Hongkong & Shanghai Banking Corporation an die Direction der Disconto-Geesellschaft. London, den 29. Februar 1896; ibid., Hongkong & Shanghai Banking Corporation an Herrn Brussel. Telegram, London, den 6. Marz 1896. PA AA China 3, Finanzen Chinas, vol. 12, Gesandte Schenck zu Schweinsberg an den Reichskanzler Fursten zu Hohenlohe-Schillingsfurst, Peking, den 7. Marz 1896; ibid., Gesandte Schenck zu Schweinsberg an den Reichskanzler Fursten zu Hohenlohe-Schillingsfurst, Peking, 10. Marz 1896.

(66.) Auguste Gerard, Ma mission en China, 1893-1897, Paris: Plon-Nouritt, 1918, 126.

(67.) TNA, FO 17 China/1275, Beauclerk to Salisbury, No. 73, confidential, Peking, 27 February 1896.

(68.) Ibid.

(69.) PA AA, China 3, Finanzen Chinas, vol. 11, Bericht des Herrn Imelmann uber ein Gesprach mit Herrn Rothstein, Berlin, den 19. Februar 1896, abends; ibid., Julius Brussel an die Hongkong & Shanghai Banking Corporation, Telegramm, Berlin, den 2. Marz 1896; TNA, FO 17 China/1276, Beauclerk to Salisbury, No. 11, confidential, Peking, 11 March 1896.

(70.) The Times, 9 March 1897. To the preliminary conditions of the loan, see PA AA, China 3, Finanzen Chinas, vol. 11, Depesche der Hongkong Bank an Herrn Brussel, London, den 9. Marz 1896; ibid., Herr Brussel an die Hongkongbank, Telegramm. Berlin, den 9. Marz 1896; ibid., Hongkong Bank an Herrn Brussel, Telegramm, London, den 9. Marz 1896; On the final meeting with Chinese ministers Weng Tonghuo and Zhang Yinhuan, see TNA, FO 17 China/1276, Memorandum, Anglo-German Loan Negotiations, Interview at Tsungli Yamen, Peking, 11 January 1896.

(71.) Edwards, British Diplomacy, 15.

(72.) Ibid.

(73.) Germany (Deutsch-Asiatische Bank), Great Britain (Hongkong & Shanghai Banking Corporation), Agreement for Chinese Imperial Government 5% Sterling Loan of 1896, 23 March 1896, in MacMurray, ed., Treaties, vol. 1, 55-9.

(74.) Ibid.; Edwards, British Diplomacy, 14.

(75.) Young, British Policy, 46.

(76.) Ibidem, 51.

(77.) TNA, FO 17 China/1356, Various diplomatic, Memorandum by Norton, 1 January 1898.

(78.) To the question of the French participation on the loan, see PA AA, China 3, Finanzen Chinas, vol. 15, Brief der Disconto-Gesellschaft an die Hongkong-Bank vom 24. November 1897; ibid., Telegramm des Herrn Bezolds aus Paris an Herrn v. Hansemann vom 14. November 1897; ibid., Telegramm des Herrn Bezolds aus Paris an Herrn Geheimrath v. Hansemann vom 16. November 1897, confidentiel; ibid., Telegramm des Herrn Bezolds aus Paris an Herrn v. Hansemann vom 17. November 1897; Young, British Policy, 51.

(79.) TNA, FO 17 China/1314, Diplomatic telegrams, MacDonald to Salisbury, Tel. No. 95, Peking, 22 December 1897; TNA, FO 17 China/1333, Diplomatic despatches, MacDonald to Salisbury, No. 3, Peking, 12 January 1898.

(80.) Record on Bertie's negotiations with Alfred de Rothschild about the Russian activities concerning the loan and about Rothstein's second mission to western Europe, see Bertie Papers/ British Library, Add MS 63013, Bertie, London, 6 January 1898. Further to Rothstein's mission, see ibid., Bertie to Salisbury, private, London, 18January 1898.

(81.) Joseph, Foreign Diplomacy, 228. The data are taken from the Board of Trade Journal, May 1899, 521-5.

(82.) TNA, FO 17 China/1333, Diplomatic despatches, MacDonald to Salisbury, No. 3, Peking,

(83.) Ibid

(84.) TNA, FO 17 China/1330, Various diplomatic, Hongkong and Shanghai Banking Corporation to Foreign Office, London, 24 December 1897.

(85.) Edwards, British Diplomacy, 23.

(86.) Ibid.

(87.) Parliamentary Papers (Commons), 1898, vol. 105 (State Papers), Cmnd 8814, "China No. 1. Correspondence Respecting the Affairs of China. April 1898," 78. For more on the loan terms, also see Morse, International Relations, vol. 3, 115-16.

(88.) TNA, FO 17 China/1314, Diplomatic telegrams, MacDonald to Salisbury, Peking, 13 December 13 1897

(89.) The Times, 18 January 1898, 1; Joseph, Foreign Diplomacy, 238; Otte, China Question, 105; Langer, Diplomacy, 465; Cedric J. Lowe, The Reluctant Imperialists: British Foreign Policy 1878-1902, vol. 2, London: Routledge & Keegan Paul, 1967, 227.

(90.) Joseph, Foreign Diplomacy, 238.

(91.) Secretary Hay to Ambassador in Great Britain (Choate), Washington, 6 September 1899 in United States Relations with China. With Special Reference to the Period 1944-1949, Washington: Department of State Publication, Division of Publications, 1949, 414-16.

(92.) Mary H.Wilgus, Sir Claude MacDonald, The Open Door and British Informal Empire in China, 1895-1900, New York and London: Garland Publishing, 1987, 182.

(93.) Baron Alexandre Meyendorff, ed., Correspondance diplomatique du Baron de Staal, 18841900, 2 vols, Paris: Libraire Marcel Riviere 1929, vol. 2, Staal a Mouravieff, Discours de Sir M. Hicks Beach, Angleterre et Russie, le 2/15. mars 1895, 369-70.

(94.) Wilgus, Sir Claude MacDonald, 181.

(95.) British Documents on the Origins of the War 1898-1914 [from here: BD], eds George Peabody Gooch and Harold Temperley, vol. 1: End of British Isolation, London: His Majesty's Stationery Office, 1927, No. 5, Salisbury to O'Conor, Tel. No. 7, secret, London, 17 January 1898, 5.

(96.) TNA, FO 17 China/1338, Diplomatic telegrams, Salisbury to MacDonald, secret, London, 17 January 1898.

(97.) Young, British Policy, 52.

(98.) Ibid., 62; Edwards, British Diplomacy, 26.

(99.) TNA, 17 China/1340, Diplomatic telegrams, Despatches, MacDonald to Salisbury, Peking, 16 January 1898.

(100.) BD, vol. 1, No. 6, O'Conor to Salisbury, Tel. No. 10, secret, St. Petersburgh, 20 January 1898, 6. For more details on the Muravyov-O'Conor meeting see Joseph, Foreign Diplomacy, 240-2.

(101.) BD, vol. 1, No. 8, O'Conor to Salisbury, Tel. No. 12, St. Petersburgh, 23 January 1898, 7.

(102.) Ibid., O'Conor to Salisbury, No. 38, confidential, St. Petersburgh, 31 January 1898, 8.

(103.) TNA, FO 17 China/1338, Salisbury to MacDonald, Tel. 23, London, 25 January 1898; ibid., Salisbury to MacDonald, Tel. 25, London, 1 February 1898.

(104.) The Times, 26 January 1898, 1.

(105.) Niels P. Petersson, Imperialismus und Modernisierung. Siam, China und die europaischen Machte 1894-1914, Munchen: R. Oldenbourg, 2000, 63.

(106.) Morse, International Relations, vol. 3, 117.

(107.) BD, vol. 1, No. 14, Salisbury to O'Conor, Tel. No.36, secret, London, 8 February 1898, 11.

(108.) TNA, FO 17 China/1356, Cameron to Foreign Office, London, 10 February 1898.

(109.) BD, vol. 1, No. 18, O'Conor to Salisbury, No. 32, secret, St. Petersburg, 19 February 1898, 14. The Russian occupation of Port Arthur occurred on 18 December 1897; Britain was also disquieted by reports that Russia had decided to acquire the Liaodong Peninsula on loan; for more details, see Lowe, Reluctant Imperialists, 230-1.

(110.) Meyendorff, Correspondance diplomatique, vol. 2, Staal a Mouravieff, La question d'un port chinois, Le 21. janvier/2. fevrier 1898, 371.

(111.) Hansard 1803-2005, Parliamentary Debates, vol. 54, 25 February 1898, 31, available at: http:/hansard.millbanksystems.com, accessed 17 April 2017.

(112.) Germany (Deutsch-Asiatische Bank), Great Britain (Hongkong and Shanghai Banking Corporation) & China, Agreement for the Chinese Imperial Government 4 1/2 Gold Loan of 1898 (MacMurray, ed. Treaties, vol. 1, 107-12).

(113.) Ibid., 109; Petersson, Imperialismus, 65.

(114.) Hansard 1803-2005, Parliamentary Debates, vol. 54, 1 March 1898, 309.

(115.) Ibidem, 331-2.

(116.) Russia demanded that the occupation of Port Arthur and Dalian be permanent; a concession for construction of the railway through Manchuria and construction of the branch to Port Arthur; and the engagement of Russian military instructors with troops in northern China (GP, vol 14 part 1, Nr. 3754, Der Gesandte in Peking von Heyking an das Auswartige Amt, Tel. No. 52. Peking, den 6. Marz 1898, 155). The same demands were submitted to the Chinese envoy in St. Petersburg (GP, vol. 1 part 1, Nr. 3755, Der Botschafter in Petersburg Furst von Radolin and das Auswartige Amt. Telegramm Nr. 60, St. Petersburg, den 12. Marz. 1898, 155-6).

(117.) Wilgus, Sir Claude MacDonald, 187.

Source Citation   (MLA 8th Edition)
Skrivan, Ales, Sr., and Ales Skrivan, Jr. "Financial battle for Beijing: the great powers and loans to China, 1895-1898." The Historian, vol. 79, no. 3, 2017, p. 476+. Student Edition, http%3A%2F%2Flink.galegroup.com%2Fapps%2Fdoc%2FA508103866%2FGPS%3Fu%3Dasiademo%26sid%3DGPS%26xid%3D356741b5. Accessed 25 Sept. 2018.

Gale Document Number: GALE|A508103866