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

2

Chinese authorities as long as the question of the Kulikha-Têngyüeh section remains unsettled,

In May last the Governor-General here stated that he would agree to the proposed reconnaissance on the same understanding as in the case of the Tengyueh survey, namely, that the question of construction is for future discussion; and I telegraphed in this sense to Mr. Carnegie on the 17th May. If I now write officially to his Excellency to say that Mr. Lilley, assisted by three engineers, is to commence next January the survey of the country between Tengyüeh and Tali, he would undoubtedly again raise the question of construction, and it is just possible that he might show a disposition to recall his previous assent to the reconnaissance. Quite sufficient authorization has been given, and it is not in the least likely that any opposition would be shown by the Chinese should Mr. Lilley (who is now well known in the Têngyüeh district) reappear and continue his surveying of last spring, extending it eastwards towards Yungchang and Tali. It is rarely advisable when dealing with a timorous Government such as that of China (still less with a Chinese provincial Governor) to expand a simple promise into a meticulous indenture. The Governor-General of the Yün-kwei has assented to the reconnaissance, and that assent implies a duty on his part to protect the surveyors, who, again, may choose their own time for beginning work. Meanwhile, there can be no harm in referring, incidentally and in conversation, to the coming survey. This, indeed, I have more than once done, and no objection of any sort has been raised. When the time for Mr. Lilley's departure from Bhamo arrives, Mr. Ottewill can ask the Taotai at Têngyüeh who among his staff is to accompany the survey and what measures are being taken for the protection of the party.

The time for that departure should, I cannot but think, be earlier than the date proposed—the 1st January. I fear that Mr. Lilley has not appreciated the formidable nature of the task before him. I have no pretensions to any engineering knowledge, but I have travelled along what passes for the high road between Têngyüeh and Tali, and I can hardly believe that, however energetic they may be, a party of four engineers will succeed in discovering a practicable route, even for a light railway, in the neighbourhood of that road in the short time between the 1st January and the commencement of the rainy season. It will not be sufficient, as was largely the case with the Bhamo-Têngyüeh survey, to follow the road; the engineers will have to cast about continually, to north and south, and this will take time. On the other hand, the months of November and December are, as a rule, among the best for surveying operations on the Yünnan plateau, which is reached on reaching Têngyüeh.

It is superfluous to insist on the great advantages that would accrue to the British Empire, and in particular to Burmah, from the opening of a railway across Yünnan into the wealthy province of Szechuan; that may be taken as an axiom. Hitherto, however, those travellers who have studied on the ground the approaches to Tali from Burmah have maintained that the route via Têngyüeh and Yungch'ang is altogether impracticable, whereas the route via Kunlong Ferry, Yun Chou, and Mitu is quite feasible. What is to be feared now is that Mr. Lilley's party will, long before reaching Tali, be so appalled by the difficulties of the Têngyüeh-Yungch'ang-Yangpi trace that they will declare all projects of railway extension into Central Yunnan from Burmah to be outside the range of practical politics, and without examining the rival route by Kunlong Ferry will return to headquarters with a report that may sound the knell of British trade and influence east of Yungch'ang.

It was for this reason that I urged that a second party should be sent to Tali via Tongking and Yunnan-fu; and that the two parties, meeting at Tali, should proceed together to examine the Mitu-Kunlong route. By following the line of the Laokai-Yunnan-fu Railway, through the Namti and Pei-ta-ho gorges and over the watershed between the basins of the West River and the Yang-tsze, our engineers would see what difficulties their French competitors have surmounted, and would be less easily discouraged than may perhaps now prove to be the case.

I have, &c.

(Signed)

W. H. WILKINSON.

AFFAIRS OF CHINA.

CONFIDENTIAL.

[39931]

No. 1.

November 27.

SECTION: 1.

C. O.

48055

09 DEC 06

The British and Chinese Corporation to Foreign Office,~(Received November 27)

Sir,

22, Abchurch Lane, London, November 26, 1906.

WE beg leave to acquaint you, for the information of Sir Edward Grey, that on the 16th instant we received telegraphic advice from our Representative in China, Mr. Bland, that the Chinese Government had accepted our offer to take the balance of the Shanghae-Nanking Railway loan (1,000,000l.) at 95l, with the option to us to issue the bonds at any time during the next six months.

We then requested our Representative to arrange with the Chinese to authorize the Chinese Minister in London to seal the bonds and the relative net profit certificates, and on the 22nd instant Mr. Bland telegraphed that Tang Shao Yi had informed the British Minister that the requisite instructions had been sent to the Chinese Minister in London.

The Minister informs us that his instructions are to seal bonds for 650,000l., and that he has no instructions with regard to the remaining 350,000l. (making up the 1,000,000l.), or in regard to the net profit certificates to which we are entitled.

We represented to the Minister that there must be a mistake, and requested him to telegraph to Peking on the subject. He declined to do so on the ground that the proper course was for the Corporation to instruct its Representative to make the requisite representations at Peking.

We accordingly telegraphed the circumstances to Mr. Bland (who is at present in Shanghai), requesting him to do what is necessary, and we presume he will communicate with His Majesty's Minister at Peking.

We beg leave to request that Sir Edward Grey will be pleased to take note of the imperfect authority which has been sent to the Chinese Minister in London, and to communicate with His Majesty's Minister in Peking should he consider it necessary.

We are, &c. (Per the British and Chinese Corporation, Limited),

(Signed) W. KESWICK, Chairman.

[2226 dd-1]

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