1. The ford at the Nampaung River;

2. Part of the Peng Hsi hill;

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3. The fold over the Taiping at Manwyne.

All these will be avoided by the new Kulilika-Lung Chang road,

4. A marsby section between Lung Chang and Kangai;

5. The Nantien gorges, 50 miles from Têngyüeh ;

6. The mountain torrent at Lang Sung Kwan, 20 miles from Têngyüeh.

These three are all nasty places, where constant delays, damages, and even loss of life occur in the rains. If the road continued beyond Lung Chang the first care of the officers in charge of the work should be to remedy these three difficulties.

If, as I earnestly venture to hope, the Government of Burmah takes up this question, the necessary negotiations should be got through this summer, so that an alignment and trace and possibly further work at the difficult places mentioned above would be undertaken

next seasoB.

I bave from time to time made various suggestions for the improvement of trade, which I need not again repeat; but as I wish to put as complete a case as possible in this Memorandum, I cannot refrain from again referring to the question of opium carriage. If this drug was allowed to cross Burmah on its way to Canton and Shanghae, the whole conditions of our trans-frontier trade would be revolutionized and the prosperity both of Bhamo and Tengyüel greatly increased. Probably the whole of the West Yunnan crop, representing a value of about 700,0001., would go to its market viâ Têngyüeh and Burmah, and this, of course, would react favourably on the import trade of Têngyüeh. The case for railway construction would then become very strong indeed, and Burmah might go Meanwhile we must always forward with the assurance that a paying line would result.

bear in mind that the opium prohibition represents a dead loss to which we are subjecting ourselves; there is no counter-balancing benefit at all. Every merchant and traveller in Yunnan knows that the provincial opium trade has increased and is increasing, and that the competition with India, if it exists at all (which is not quite clear) is just as keen now as it would be if the drug went across Burmah. No one would propose to keep the cat from escaping from a room which had four windows by closing only one of them; yet this is what is being done with regard to Yunnan opium. So long as the Szechuan, Kwei Chou and Kwangsi and Mengtse routes are open (and India has no sort of control over any one of them), every ounce of Yunnan opium that wants to get to Canton will get there; nor do I think that any well-considered scheme for the transit of opium across Burmah need necessarily meet with the opposition of the Yünnan or Canton Govern- ments, for both of them are badly in want of money, and an arrangement would be made by which the Imperial Chinese Customs at Têngyüleh would not let out, and at Canton not let in, any opium that had not paid provincial likin.

To resume. It is submitted that the political situation in Yünnan urgently calls for appropriate action on the part of the Government of India, designed to secure our interests in the event of a collapse of the Chinese Government. Under present conditions it is suggested that the most effectual and practical measure would be the construction of a Taiping Valley railway to Têngyüeh from Bhamo, and that as a preliminary step the country should be surveyed by competent engineers with a view to the preparation of an estimate of the probable cost. In the meanwhile it is urged that no time should be lost in pressing on the construction of a good mule-road up to Tôngyüeh.

Inclosure 7 in No. 1.

Consul-General Wilkinson to Government of Burmah.

Yunnan-fu, March 15, 1904.

(Confidential.)

MR. LITTON has sent me a copy of his "Memorandum on Relations between Burmah and Yunnan, with reference to proposed Improvements of Communication," addressed to you on the 20th ultimo.

It is, in effect, a plea for the speedy continuation to Têngyüeh of the mule road which your Government is now engaged in improving from the Kulikha to Lungchang; for the construction of a railway from Blamo to Têngyueh; and for abolition of the rule forbid- ding the transit of Yünnan opium through Burmah,

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Mr. Litton devotes much space to the advances which French influence must make in Yünnan with the completion of the railway from Tonquin to this city; and urges that it is time for your Government to take stock of its position.

am unable to altogether agree

I am in entire accord, so far, with Mr. Litton; but with him as to the efficacy of his proposed remedy. It is not in the least likely that France will annex, or will declare a protectorate over, the Province of Yünuan as a whole, and therefore over the Yungchang prefecture, limitrophe to Burmah; but if circumstances ever bring about such a proceeding, we shall doubtless have obtained equivalent advan- tages elsewhere. What is to be apprehended is that when the Tonquin Railway reaches As Yunnan-fu, the Company will begin to agitate for an "embranchement" to Tali. Mr. Litton has frequently pointed out, the richest portions of Yunnan are the valleys that lie north and south of the Erh-bai Lake; and Hsia-Kuan, rather than Yunnan-fu, is the commercial capital of this province.

There are few physical difficulties in connecting by rail those fertile valleys with this city; on the whole route there are perhaps not more than half a dozen places that would present problems to a modern engineer. In other words, it will be represented, and with much justice, that those valleys fall naturally within the sphere of operations of a railway passing through Yunnan-fu; and that the true end of the Haiphong-Yunnan line will not be attained unless and until it is extended, if not to Szechuan, at least to Hsia-Kuan.

Even if the line is not so extended I fail to see how Burmah can hope to continue to supply the Tali districts when once the Haiphong-Yunnan Railway is in working order. To say that a little local railroad from Bhamo to Têngyüeh would be commercially an almost complete answer to the French line, seems hardly consistent with the admission, a few lines lower down in Mr. Litton's essay, that "any extension of a line beyond Têngyüeh towards Yungchang is quite hopeless."

"

If such extension is really quite hopeless," then a railway from Bhamo to Têngyuch would, 1 fear, prove of very little use to us as a counterpoise to the Haiphong-Yunnan line and its inevitable expansion westwards. I do not know, however, that such extension ought to be regarded as "quite hopeless." To begin with, a curve round the spur to the north of Tengyüeh town would, I understand, bring the railway into the Shweli Valley, down which it might run to Namkhan. This it is true would only help it forward one stage towards Yungchang, and would leave the formidable watershed of the Shweli- Salween basins to be negotiated. Beyond this, again, lies the still more formidable water- shed of the Salween-Mekong. This last once crossed, the road to Hsia-Kuan is compara- tively simple. What, however, has never, as far as I am aware, been noted in this connection is the fact that although these watersheds run at right angles to the line of advance, they are provided with many lateral valleys that should facilitate this advance. Advantage has, indeed, been taken of these lateral valleys to and from the Chinese high road, but not such complete advantage as a modern engineer would take, provided with high explosives and compressed air drills. No specialist in mountain railway building has, I believe, reported on the country between Têngÿüch and Yangpi.

While for these reasous I would not unreservedly acknowledge, with Mr. Litton, that any extension of a line beyond Têngyüeh towards Yongchang is quite hopeless, I am prepared to admit that it would be exceedingly expensive, so expensive that if we are to make an effort to retain the trade of Tali, and our influence in its neighbourhood, we should see first if we cannot find an easier, and therefore cheaper, approach.

Such approach is believed to have been found in the projected extension of the Lashio line through Yin Chou to Mito. If this belief is justified, then-as far as questions of rivalry with the French are concerned--we should not dissipate our energies by building a railway from Bhamo to Têngyüeh, but should seek to complete the Lashio-Kuulong line and to continue it to Tali, if not to Yunnan-fu.

There is another aud a greater reason for preferring any section of the proposed Kunlong ferry line to a mere local railway to Têngyueh--always assuming the practicability of indefinitely extending the former. Just as the Russians have succeeded constructing a trans-Asiatic railway in the north, so is it certain that others will eventually succeed in constructing its rival to the south. From the Bosphorus down the Euphrates Valley, across Persia, Baluchistan, India Burmah, the Great Southern Railway of Asia must some time be made; and we ought to look forward to that time and subordinate, as far as possible, all minor schemes to the one trunk line. I do not of course mean to say that we should in the meanwhile build no railway that will not fall in with this line; but only that when we have, as here, a choice of routes of penetration eastward into Yuunan from Burmah, we should attach greater importance to the route that will eventually form part of the grand trunk road. This brings me back to the question whether the Lasbio-Kunlong-

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