inadmissible. In a recent interview with Shêng I obtained from him a definite statement that the present claims are without foundation; nevertheless, there is, as I have said, good reason for believing that he has been a supporter of the Continental syndicate throughout, and that only the outbreak of the Russo-Japanese war has prevented the elimination of the small remaining American interest in this southern trunk line. And, if the Cabinet at Washington has decided to recognize this Belgian-controlled undertaking as an American corporation, the fact is undoubtedly due to Shêng's adroit diplomacy.
Herein, of course, lies the crux of the matter. The Chinese Government's present inclination is towards cancelling the Washington contract, and in this it is actuated partly by recognition of the strong views held by Chang Chih-tong and the Hunanese officials and partly by alleviation of Franco-Russian pressure at Peking. If, however, the United States Government decides to recognize and protect the syndicate as an American corporation, the Chinese Government's position becomes extremely difficult.
It is on this question of protection that the whole matter really rests. General Whittier and the Belgian stockholders assert that the corporation's international status is not affected by the fact that the controlling interest has ceased to be American; they gravely cite precedents of foreign stockholders in other American corporations and refer especially to the Panama Railway Company. They overlook, however, and the United States Government appear to have overlooked, the essential fact that in China foreigners and their property are extra-territorialized by treaty, and that it becomes, therefore, the duty of the American Government to intervene if necessary for the protection of American interests or individuals. The Chinese Government appears to realize this fact better than the American. It realizes that Belgian control must eventually entail Belgian personnel, and therefore Franco-Belgian diplomatic and other pressure, and it fails to admit the possibility of the United States Government's continuing to concern itself seriously in an undertaking from which American capital and initiative have been eliminated. It recognizes the fact that the duty of protection must vest in the Government whose subjects control this important undertaking.
This essential fact was recognized by the founders of the American company at the outset; for in an agreement of co-operation made with a British syndicate in December, 1898, we find it stated that the two companies believed "that the Governments of their respective countries, by uniting in the assurance of protection of the rights of their respective subjects and citizens, on which they have hitherto relied in embarking capital in foreign countries, will afford an effectual force for the protection of such enterprises." (Page 325, Blue-book of 1899.) It was equally recognized by the Chinese Minister at Washington in 1898 and by Chang Chih-tung, who saw in the advent of American enterprise in South China a welcome means of checking the political aims of the European Powers. Even recently (November, 1903), Sir Chentong Liang, the present Chinese Minister at Washington, said in a letter to Shêng Ta-jên:
"In my opinion the reason why the Han-kau-Canton Railway concession was given to the Americans lies in the fact that America would never attempt to weaken China's sovereign rights in the control of this railway. The United States Government is strong, and could be used, if necessary, to oppose aggression by the French and Belgians on the Lu-Han line. If the American company surrenders its concession to the Belgians there will be endless trouble."
The whole question is, therefore, one of protection of foreign extra-territorial rights in a Chinese Government railway, a question complicated enough in itself and rendered doubly difficult by the vast political interests involved. That the spirit of the American agreement has been violated by allowing the Belgians to obtain control of the undertaking is certain; and the Chinese would therefore be well advised either to cancel the contract or to insist on a clear definition of its American nationality and an undertaking by the United States Government to maintain the same unimpaired.
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