[This Document is the Property of His Britannic Majesty's Government.]

AFFAIRS OF CHINA.

CONFIDENTIAL.

(32209)

No. 1.

731

[September 24.

SECTION 2 CO

38281

RECEIVED 17 00! 06

Mr. Carnegie to Sir Edward Grey-Received September 24.) (No. 333. Confidential) Sir,

I HAD the honour to inform you in my despatch No. 281, Confidential, of the Peking, August 7, 1906. 28th June last that Mr. Tang Shao-yi had given me to understand, in private conversation, that the instructions which were shortly to be sent by the Shui-wu Ch'u, the new Revenue Council established, in consequence of the Decree of the 9th May to Sir Robert Hart, would contain directions to the effect that he was to carry on as before, and that Sir Robert Hart had promised to give me a copy of these instructions when he received them.

As soon as I learnt that the instructions had been issued I called, in the absence of Sir R. Hart at the seaside, on the Deputy Inspector-General, Sir R. Bredon, and asked him for a copy,

As he, however, appeared unwilling to accede to my request and would do no more than read them to me, I applied to Mr. Tang, who sent me a copy at once. I have the honour to inclose a translation, which has already been telegraphed to you in my telegram No. 147 of the 1st August. As will be perceived, the instructions contain no directions to the Inspector-General in the sense promised by Mr. Tang. I accordingly asked his Excellency for an interview, which he granted me at his house last Friday morning.

I began by referring him to our private conversation on the 15th June last, and reminded him of the assurance he had given me on that occasion. I told him that I had reported to you what had passed, and that you had replied that you would wait to see how the instructions were worded before taking any further steps towards obtaining in some form or other the publication of the understanding contained in the note from the Wai-wu Pu of the 1st June. I said that you were aware that he had spoken to me privately on the subject last June when at my house, for, as you know, I drew a hard and fast line between private and official communications.

His Excellency thanked me, and, although he looked slightly annoyed, he did not attempt to question the accuracy of my account of our conversation. He then proceeded to argue that the fact that as the instructions contained no curtailment of the powers of the Inspector-General, they amounted to an order to carry on as before; moreover, the Inspector-General had been twice verbally told to do so by Mr. Tieh Liang and himself.

The instructions were in no way at variance with the undertaking given in the note of the 1st June, in which I would remember it had been stated that the Inspector-General's position would remain unchanged. I replied that, according to my recollection, the note had made no mention of the Inspector-General. In any case, I could not admit his contention that because certain specified instructions were omitted others were to be implied. There could have been no misunderstanding if he had carried out the promise he had given me. I pointed out the importance which His Majesty's Government attached to this matter, and reminded him that it would be to his advantage to meet their wishes, China was thinking of borrowing money, and desired to open the opium question. His Majesty's Government was not unwilling to help her, and was animated by the most friendly feelings towards her, as he knew from a recent communication I had made to him (see your telegram No. 138 of the 30th July). I therefore earnestly urged him to instruct Sir R. Hart to issue a Circular to the effect that his powers and authority were not affected by the recent Decree. Such a step would go far to remove the uneasiness felt, not only by His Majesty's Government, but also by the bondholders and the members of the Customs Service in regard to the intentions of the Shui-wu Ch'u.

Mr. Tang replied that Sir R. Hart was at perfect liberty to do this without orders. He could issue a Circular containing the verbal instructions given him by Tieh and himself, which were in no sense private. He had no objection to such a course.

His Excellency then exclaimed, "Why is there all this excitement, all this uneasiness; what have I done? I defy any one to point to any act

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