I have, &c.

(Signed)

HO. BAX-IRONSIDE.

rights;

the best course for him to pursue in order to obtain a Concession of mining rights and I have now pointed out to him that other British subjects are equally entitled to follow this course, and they would naturally receive the support of this Legation in the enjoyment of any properly-acquired rights.

Sir,

Inclosure 1 in No. 1.

Mr. Chance to Mr. Bax-Ironside.

Peking, June 28, 1899.

I BEG respectfully to request you to note my application on behalf of the Anglo-Eastern Syndicate for support, in priority to other British applicants, in order to obtain from the Chinese authorities a Concession of mining rights in the

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On the 24th ultimo I addressed a note to the Tsung-li Yamên embodying your Lordship's instructions, and at the same time I asked for an interview which was arranged for the 27th ultimo.

At this interview I asked the Ministers if they had received my note intimating that Her Majesty's Government required compensation for the Kowloon disturbances.

The Tsung-li Yamên replied that the note had been received and that they were greatly surprised that Her Majesty's Government, after having obtained possession of the territory, should make a monetary demand in addition.

I replied that the demand was made on account of the opposition caused by the Chinese troops to our taking over the territory, and that I had informed them already, on two previous occasions, that your Lordship proposed making such a demand. I intimated that the conduct of the Canton Viceroy had been far from satisfactory during the whole of the negotiations, and it appeared to me that, in their own interest, much friction would be removed if his Excellency were allowed to retire into private life. He was old, I added, over 80, infirm, and supposed to be suffering from an acute disease.

To this the Ministers made no reply, but they declared it to be the duty of the British Government to protect their own territory; we had no right to claim compensation from China.

I reminded them, as I had so often done before, that the disturbances took place before Her Majesty's Government took possession of the territory. Their Excellencies tried to argue that a disturbance on Chinese territory did not affect the British Government. I pointed out that the Hong Kong Government were now in possession of a considerable area of land beyond the limit assigned by the Convention, and it depended largely on the manner in which the Chinese Government treated your Lordship's demands as to how we should deal with the territory in question.

One of the Ministers exclaimed that such a position was inconsistent with the friendly relations existing between the two countries.

I answered, that from the very commencement of the negotiations for taking over the territory, it had been the earnest wish of Her Majesty's Government to arrange the matter amicably; as could be proved both by the visit of his Excellency the Governor of Hong Kong to the Canton Viceroy, and by the many interviews which I had held with their Excellencies, in all of which I had strenuously urged them to co-operate with Her Majesty's Government in this matter. Her Majesty's Government regretted exceedingly that the Canton Viceroy had not seen fit to co-operate with us, with the result that this claim for compensation had now to be made.

The Tsung-li Yamên replied that the Chinese Government could not accede to the demand, and they begged me not to argue on the matter any further. They would prepare a reply to my note for communication to Her Majesty's Government.

I then added that I had a communication to make to them which had not been included in my despatch, as it seemed preferable to me to make it verbally. Your Lordship had instructed me to intimate that if the Chinese Government acceded to our demands in connection with the Northern Railway and other pending matters, Her Majesty's Government might be induced to modify this claim.

The territorial question, I again reminded them, was not yet settled. The Tsung-li Yamen thereupon asked if on those terms the city of Kowloon would again be restored to them. I said that I had received no instructions on this particular point.

This interview with the Yamên confirmed me in the opinion which I had had the honour of conveying to your Lordship by telegraph two days previously, namely, that our occupation of territory outside the Kowloon Extension appeared to be regarded by the Peking authorities with indifference, and that beyond making their formal protest the Ministers had not of their own accord in any way alluded to the subject.

On the 27th ultimo I telegraphed the result of my interview to your Lordship, and on the 29th ultimo I had the honour to receive your Lordship's telegram informing me that Her Majesty's Government will not withdraw from Shamchun until there is evidence that the Chinese Government purpose observing their engagements in regard to the Northern Railway and other matters.

On the 1st instant I received a note from the Chinese Government in reply

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