On December 20, 1897, a report reached the British Foreign Office that three Russian men-of-war had arrived at Port Arthur, and that three others were expected at Talien-wan and three more at Port Arthur.[202] Two days later it was officially explained by Count Muravieff “that the step taken was entirely a question of convenience for the ships, and had absolutely no connection with the occupation of the bay of Kiao-chau by Germany.” The Count added “that there had always been a difficulty about keeping more than a certain number of men-of-war at a time in Japanese ports, and that, consequently, the Imperial Government had been glad to accept the offer of the Chinese Government to allow the Russian squadron to winter at Port Arthur. This arrangement was all the more convenient as that port was within an easy distance of Vladivostok, and had an arsenal where their ships could undergo all necessary repairs. Moreover, it was an advantage that Port Arthur was quite free from ice in the winter, though this fact was not so important now, as Vladivostok was at present furnished with an exceptionally powerful ice-breaker, which it was hoped would make that port available for egress and ingress during the winter months. In fact, Vladivostok remained, as heretofore, their centre in the Far East, and the headquarters of their land and sea forces, so that the mere fact of the Russian squadron wintering at Port Arthur made no change whatever in the situation.”[203] On the same day that this pacific declaration was made, it was reported, as it was later confirmed by Chinese authorities, that Russia was offering to China a 4 per cent. loan of 16,000,000 pounds at 93, an extremely favorable term, to pay off the balance of the Japanese indemnity. The suggested security was the income of the land tax and _likin_, besides which Russia was said to have demanded as _quid pro quo_ all future railway concessions in Manchuria and North China, as well as the succession of a Russian subject to Sir Robert Hart as Inspector-General of the Maritime Customs.[204] It was on this occasion that M. Pavloff, claiming that the Tsung-li Yamên had promised to employ Russian engineers and Russian capital in the construction of any railway between the Great Wall and the Russian frontier, undertook to record the alleged promise and express his gratification, and, seeing that the Yamên did not reply, took it for granted that the matter was settled, and notified the St. Petersburg Government to that effect.[205] Nor did the Russian Representatives at Peking fail thereafter to appeal to this agreement concluded by M. Pavloff in so striking a fashion, whenever China opened any discussion with another Power regarding any subject connected with railways north of Shan-hai-kwan. In the mean time, an Anglo-German syndicate had made an offer, last June, of a loan for the same purpose, and now Sir Claude MacDonald strongly supported a scheme of a new loan