The Foreign Secretary concluded his speech with an exposition of the motives which had induced the German Government to occupy Kiao-chau in preference to other places. Its proximity to the scene of the massacre had been the first consideration. Secondly, it was favourably situated from a political point of view, being removed from the French and British spheres in Southern China and from the Russian base of operations in the north. Lastly, the spacious, ice-free harbour, the climate, which is probably the best to be met with in China, and the existence of coalfields in the vicinity of the coast, offered sufficient grounds for the choice of Kiao-chau. Herr von Billow might have quoted in this connection a candid remark which had been made not long before by the "Kolonial Zeitung:" "The principal point is that the Power which possesses Kiao-chau will control the coal supply in northern Chinese waters." _Great Britain, Papers by Command: China, Number 1, 1898._ CHINA: A. D. 1898 (February). British diplomacy in China. The tone in which foreign demands were made on the Tsung-li Yamên. Agreement not to alienate the Yang-tsze region. Early in 1898 the Chinese government was in need of money for the final payment of indemnity to Japan, and opened negotiations with the British government for the guarantee of a loan: Her Majesty's Ministers were quite ready to give the needed financial aid, for a consideration, requiring, in return, that Ta-lien-wan should be opened to trade as a treaty port. But Russia was then scheming to secure possession of Ta-lien-wan, and interfered with the British negotiation so vigorously that the Chinese were frightened into breaking it off, even after they had practically accepted the offered loan. Not daring, however, to take from Russia the financial guarantee which they rejected at British hands, they thought to balance themselves between these jealous rivals by borrowing without help from either. Both the Powers were thus offended, England especially showing stern resentment on account of the slight with which she had been treated. The following report by Sir Claude MacDonald, the British Minister at Peking, of his interviews with the Tsung-li-Yamên on the subject, is very interesting, as showing the tone in which the European Powers were making demands on the government of China at that time. The despatch of Sir Claude MacDonald is dated at Peking, February 20, 1898. {82}