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Mr. Cordes acknowledges receipt of the letter in question, which has caused surprise to Mr. Bland and himself, since the proposal to refer to the Yu Ch'uan Pu, upon an official communication from the Syndicate, originated with the Chinese Commissioners. The present position of affairs is obviously impossible, and negotiation futile on these lines. He inquires whether the Yu Chuan Pu is acquainted with the situation, and whether the minutes of recent meetings have been forwarded.
Liang Taotai replies that no minutes have been sent up; the Commissioners use their discretion in forwarding them. He has, however, suggested the appointment of a direct representative of the Yu Ch'uan Pu at future meetings.
Mr. Bland observes that the Yu Ch'uan Pu's instructions in regard to these negotiations, as stated on several occasions by the Chinese Commissioners, were to the effect that the results of each meeting were to be reported to the Yu Ch'uan Pu for the information of the Board (ride minutes of the twenty-sixth meeting). Since the negotia- tions are being carried on under the direction of the Board, he considers it essentially the duty of the Board's representatives to report for instructions, especially when officially requested to do so in regard to a point of serious difference. If the Chinese Commissioners decline either to report on the situation or to ask for instructions, it will be necessary for Mr. Cordes and himself to take the matter to Peking.
Mr. Cordes concurs in this view. While most anxious to come to a settlement of these long protracted negotiations, he sees no good purpose in attempting discussion of the draft contract unless the Chinese Commissioners are definitely instructed in conformity with the assurances which the Syndicate's representatives received when agreeing to modify the system of control by elimination of the Boards of Com.
missioners.
Chow Taotai differs from this view. He suggests the possibility of discussing in the first instance the question of control, in regard to which he understands the Syndicate is prepared to meet the views of the Chinese Government. In his opinion the conditions of the haft Agreement in regard to control are not satisfactory.
Liang Taotai indorses this opinion, expressing his own to the effect that the Syndicate, while abolishing the Boards of Commissioners, has substituted for them the principle of an all-powerful Chief Engineer.
Mr. Bland states that, in abolishing the system of administration by Board, the Syndicate agreed, upon a definite understanding as regards the financial terms of the loan contract, to accept a system of control based on that of the Canton-Kowloon Agreement, a system similar to that which works to the Chinese Government's satisfac- tion on the Northern Railways. If the Chinese Commissioners accept the understanding that this basis is to be adopted, the matter requires little discussion, since the draft Agreement practically reproduces the control clauses of the Canton-Kowloon Agree-
ment.
Liang Taotai positively declines to accept the Canton-Kowloon Agreement, or any other, as a basis for the present negotiations. His instructions are to get the best terms possible for the Chinese Government; there is no mention therein of any precedent or principle to be followed,
Mr. Cordes objects that, in discussion of the terms of the Agreement, there is no finality in the Chinese Commissioners' demands; that apart from failure to recognize the Preliminary Agreement, or to ask for instructions from the Yu Ch'uan Pa, their own proposals and accepted conditions are withdrawn or modified with every fresh concession yielded by the Syndicate. Negotiations of this kind are evidently useless.
Chow Taotai observes that the attitude adopted by the Syndicate's representatives amounts to submitting a draft Agreement in regard to the essential conditions of which no further discussion is admitted. If this view were accepted by the Chinese Commis- sioners, it would only remain for them to forward the document to Peking, approved for signature. Under such conditions negotiations seem superfluous.
Mr. Bland in reply says that Chow Taotai's remarks are justified in so far as questions of principle are concerned, the draft Agreement as now submitted representing the maximum of modification which the Syndicate is prepared to make in the financial terms of the Preliminary Agreement. On points of detail, however, the text is open to further discussion. He reminds the Commissioners that the draft represents the result of some six years' negotiations; that it embodies no terms that have not been discussed and approved by both parties; and that, as regards the question of control, it adopts the conditions suggested by the Chinese Government. If it is the intention of the Chinese Commissioners to reopen these questions, he shares Mr. Cordes' view that the Syndicate cannot hope to negotiate to any good purpose, and that it becomes necessary therefore
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to ascertain definitely the intentions of the Chinese Government, and especially to obtain confirmation of the assurances given by his Excellency Tang Shao-yi.
Chow Taotai observes that, whatever may have been agreed to in earlier negotia- tions has no bearing on the present position, the Commissioners' views being always open to modification, their duty being to obtain the best possible terms.
Mr. Cordes observes that negotiations on such terms without prospect of finality on any point are impossible.
Liang Taotai maintains that it is for the Chinese Commissioners to carry out their instructions without question; if, however, the Syndicate, by direct reference of the matter to the Yu Ch'uan Pu, can induce that Board to issue new instructions accepting the Canton-Kowloon Agreement's system of control as a basis, and accepting the Syndicate's financial terms, Chow Taotai and himself are prepared to act upon such instructions.
Mr. Bland says that the condition upon which the Syndicate agreed to abolish control by Boards of Commissioners was accepted in good faith as a valid and binding undertaking. The Yu Ch'uan Pu's failure to communicate in this sense with its repre- sentatives is inexplicable, and the latters' unwillingness to make inquiries on the subject leaves no other course open but to refer the matter to the Legations and the Chinese Government. It is evidently open to the latter to decline to ratify the Preliminary Agreement, but if it is to be carried out the assurances given to the Syndicate were of a definite nature and cannot be ignored.
The meeting accordingly adjourns, it being understood that the Syndicate's repre- sentatives will communicate to the Chinese Commissioners in regard to next week's meeting after their interview with the Yu Ch'uan Pu.
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