}
2
the end of the year. The payments due to Great Britain for the year 1906, less 4
per cent. interest deducted, have been made in full, with no deficit outstanding. If the Hong Kong and Shanghae Bank delays in remitting these sums to London on any pretext, the responsibility must rest on their shoulders, as it is entirely disclaimed by China.
I trust your Excellency will be good enough to instruct the British Delegate in this sense and to favour me with a reply on this question.
I avail, &c.
[This Document is the Property of His Britannic Majesty's Government.]
419
C. O.
CHINA RAILWAYS,
CONFIDENTIAL,
[4478]
No. 1.
9150
[February ca
SECTION REGE 12 MAR 07,
Memorandum on Railway Construction in China, by Mr. Bland.---(Received at Foreign Office, February 9, 1907.)
IN the following Memorandum it is assumed that the Chinese Government recognizes the necessity for construction of railways with a view to the immediate improvement of internal trade and communications. The writer is aware that this assumption may not be universally applicable--that there still exists a certain section of public opinion at the capital and in the provinces which regards the introduction of railways with the same distrust as it displays towards any departure from the classical traditions of the past; but the class which holds these views is steadily decreasing in numbers and influence, and it may reasonably be expected that within the next few years China will follow the practice of western nations, connecting her capital with all the provincial centres, and establishing communication between the interior and the trading ports of the coast and navigable rivers.
For over thirty years China declined to adopt this course of action, the conservative and reactionary principles of her Government being opposed to any general opening up of the country. Nevertheless, since 1896, a certain number of lines have been con. structed under conditions to which I shall presently refor. As a result the advantages of railways have gradually come to be appreciated by the people while at the same time the Government has been led to realize the importance of securing their construction without detriment to the finances or sovereign rights of the Empire. At the moment of writing the question is being actively discussed throughout the country, and the Government appears to incline towards the policy of permitting the provinces to build, finance, and control their local railways, directing to that end the patriotism and energies of merchants and gentry. During the past year much activity has been displayed in this direction, and the establishment of Railway Bureaux has been sanctioned by the Throne in several provinces. Nevertheless, for reasons which I propose to state, no progress satisfactory from the national point of view is likely to be attained by these methods; on the contrary, instead of the orderly and systematic development of the country, they are calculated to produce interminable discussion, disorder and delay.
Ten years ago a distinguished foreign official, Mr. (now Sir Robert) Bredon, in the service of the Chinese Government, drew up a Memorandum, which was subse- quently published, on the subject of railways at the request of his Excellency the Viceroy Chang Chih-tung. After comparing the conditions obtaining in China and other countries, and explaining the various systems under which the introduction of railways has been carried out by foreign Governments, the author concluded as follows:-
"It seems to me the question of how railways are to be built seems to be reduced to a choice between two systems---the granting of concessions to foreigners, and the formation of Chinese Companies. I have no doubt whatever, that the latter would be in every way the most desirable, but the question is, can a Chinese Company raise the money? This is not a small matter; it involves the question of hundreds of millions of tacls. I hear on all sides that it is quite impossible to find so much money in China from Chinese, and that if the money is to be got it is to be got from abroad. That it could be got from abroad on certain conditions and at reasonable rates of interest, I believe, is pretty sure, but whether the conditions will be acceptable to China or not I do not know. The principal condition would undoubtedly be that any line built in whole or in part with foreign money should be foreign managed in all its details, and presided over by a Board of Directors composed, at least in part, of foreigners. The possibility of a mixed directorate of this kind, I think, is proved in Shanghae, where foreigners and Chinese are sitting together as Directors in several Companies in perfect accord. These Companies are under the English law, but that is to a considerable extent due to the fact that the Chinese law is not sufficiently clear. The great advantage of these Companies in the eyes of Chinese merchants is that so
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