Peking, Dec. 23.
The account of the Government's negotiation of a loan of $6,000,000 from the native bankers for the purchase of cars, which has been confirmed and denied on alternate days for the past two weeks, has been the subject of much suspicious speculation. The public has suspected in the first place that the loan was not designed for the purchase of cars at all, but was designed to meet the pressing needs of the administration. If cars are to be bought at all, they will presumably be bought through foreign concerns and it would be simple enough in this case as in the past to negotiate a credit with the foreign concern or concerns from which the cars were to be bought. It is this, combined with the Government's known shortage of funds, that arouses suspicion. In Government circles 2 very plausible explanation is given, which is interesting whether one cares 10 believe it or not. The administration's side of the story follows.
Cuinese Bankers' Sripurations, It is lamentably apparent that the Consortium is not prepared 10 make administrative loans on any terms, hard or easy. The Government, in its great need, has been forced to turn to the native bankers and to use every effort to coax a loan out of them on reas-enable terms. The native bankers show an inclination to combine and to raise very appreciable sums of money between them, but, like the exasperating foreigners, they would much rather invest their money in productive _enterprises than lend it to the Peking Government. There is little—inducement for the Chinese bankers to combine to float a big administrative loan. Individually they can and do make short term loans to the various Ministries whenever they are desperately poor at rates of interest which are nothing short of usury. It is nothing unusual for a local bank to lend one of the Ministries $100,000 for six months at 20 per cent interest. If the banks combine and make a big loan to the Government, the terms will be public property and will have to conform in some degree to foreign conventions, which means that the terms cannot be much more severe than those which foreigners have allowed the Government in the recent past. This would mean that the native banks would have to sacrifice no little profit. To this end they must be offered some other special inducement, and since relations must have a beginning somewhere the Government proposes to open relations with the car deal.
Text read from the printed page and cleaned; old type leaves the occasional error.