Reorganisation loan affair

Chinese provisional President Yuan Shikai (left) and Premier Tang Shaoyi (right)

The Reorganisation loan affair (Chinese: 善後大借款; pinyin: Shànhòu dà jièkuǎn) was a series of political incidents in the Republic of China between March 1912 and 1913. It began when Yuan Shikai, the provisional President of the country, attempted to resolve financial difficulties in the Beiyang government by taking significant loans from the China Consortium of foreign banks without the approval of the National Assembly (the parliament). The loan, amounting to £25 million (3.08 billion pounds or 4 billion dollars in 2021 value, inflation-adjusted), forced the Beiyang government to cede partial control of its national treasury to foreign ownership as leverage.

Yuan's decision to obtain the loan generated controversy in China, especially within the National Assembly and the government, as the terms negotiated to obtain the loan were considered a national humiliation. Several cabinet members, including Premier Tang Shaoyi, resigned in protest against Yuan's decision. Along with other political incidents, notably the assassination of Song Jiaoren, the event caused a large-scale political crisis that lasted until 1914, provoking the Kuomintang to launch the Second Revolution in July 1913, which ended in failure.

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