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

326

I did not report the matter at once, as it was very generally thought that the ceremony was merely a cloak for further delay.

Work is, however, now in active progress. A track had been previously marked out around the east side of the city from Chiang Kan to Hu Shu near the Settlement by cutting down trees and demolishing bouses. The work of preparing this track for the rails by building embankments, levelling, &c., has been commenced at several points within the last few days, and is now being prosecuted actively.

The building of bridges en route is to be done by contract, and advertisements calling for tenders have been issued.

From information derived from a sub-engineer on the railway I understand that it is hoped to have trains running on the Hangchow section in six months. Rails have been ordered from Hupei; wood is being obtained through a Japanese Company from the Yalu; engines have been ordered from America, and are on the way here now.

A school for the training of persons to act as station-masters, clerks, &c., is shortly to be opened, and two Japanese instructors, who have already arrived in Hangchow from Japan, have been engaged to teach in it.

I have, &c. (Signed)

J. L. SMITH.

[B]

AFFAIRS OF CHINA.

CONFIDENTIAL.

[3101]

(No. 515.) Sir,

No. 1.

[January 28.]

SECTION 8.

C.0.

7655

Rech

Sir J. Jordan to Sir Edward Grey.--(Received January 28, 1907.) Px 28 FEB 07

Peking, December 10, 1906. WITH reference to my despatch No. 485 of the 23rd November, I have the honour to state that on the 6th December I received a telegram from His Majesty's Acting Consul, reporting that the Consular Body at Newchwang had been notified by a Circular from the Japanese Consul that, in accordance with the instructions of the Japanese Government, the Military Administration of the port would be withdrawn that day. This information was communicated to you in my telegram No. 238 of the 6th December.

On the 7th December I received a second telegram from His Majesty's Acting Consul, to the effect that the Chinese authorities were in charge of the port, and that the Chinese flag was flying over the custom-house.

The Chinese text of the conditions under which Newchwang was returned to Chinese authority (a translation is inclosed herewith), was given to me on the 7th December by Mr. Hayashi, my Japanese colleague, who explained that the absence of any mention of the customs revenue collected during the Japanese military régime was due to the express desire of the Chinese Government; but he told me in confidence that Japan had agreed to return the whole of this collection on the understanding that China repays the amount which has been expended by the Japanese Administration "for local purposes."

(Translation.)

Inclosure in No. 1.

I have, &c. (Signed)

Joint Agreement of December 4, 1906.

J. N. JORDAN.

UNTIL the Japanese troops are withdrawn from Newchwang all regulations for quarantine inspection and the prevention of disease shall be arranged by the local authorities in consultation with the Japanese Consul.

2. All works of public utility which have been put into operation during the period of military administration, or which have been planned but not yet put into operation. shall be continued by the local authorities, or authorization given for them to be continued.

3. The control of the police and the preservation of order shall revert to the Chinese local authorities, who are expected to fulfil the duties connected therewith in the manner most beneficial to the public peace. Japanese police and medical officers shall be employed to assist in the performance of these duties, and the Japanese Consul shall be free to point out defects as occasion arises to the local authorities for their consideration.

4. The control of the Imperial Maritime and Native Customs shall revert to the Customs Taotai. The Chinese Government shall for the time being deposit the receipts of both Customs establishments in the Yokohama Specie Bank until a branch of the Board of Revenue Bank is established, when the receipts will be deposited in both banks.

[2310 ee- 8]

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