3. On the 24th. February 1901 the French Consul saw Mr. Fung Wa Chun at Hongkong and again suggested that the capital for the Water-works should be obtained in France, adding that if he did not agree he would not have his concession confirmed, as an agreement had been entered into with France that no concession should be granted in Kwangtung or Kwangsi except to Frenchmen or with the consent of the French Consul. Mr. Fung again declined, but he has since obtained a copy of this agreement, with which he has promised to supply me, and which seems to confirm the assertion of the Consul. The present Viceroy Tao now refuses to complete the agreement as to the concession except on the condition that the shareholders shall be exclusively Chinese, the reason being avowedly the fear of French aggression.
4. I do not know if His Majesty's Government are aware of the extent of French pretensions thus openly put forward, if such pretensions are in pursuance of an international understanding, but they synchronise with the advent of French cruisers and gunboats on the Pearl and West Rivers, and are evidently being pressed with considerable success, for the French have demonstrated their readiness to use the force that they have of late shown so freely, and have impressed the provincial Government with the inconvenience of refusing their demands.
5. The precedent of the exclusion of British capital from Kwangtung and Kwangsi in the south, as it is excluded from Shantung in the north, might be awkward in the not improbable event of a claim to similar exclusive rights in the provinces west of the Peking-Hankow-Canton line, the entire concession of the proposed line being now, I am informed, practically controlled by France.
I have the honour to be,
Sir,
Your most obedient humble Servant
Hurry Alsager
Governor, &C.
The Right Honourable
Joseph Chamberlain M.P.
Downing Street,
London.
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