This Document is the Property of His Britannic Majesty's Government..
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Inclosure 2 in No. 1.
Draft Memorandum for communication to M. Cambon.
ON the 27th June the French Ambassador communicated to Sir Edward Grey a Memorandum regarding the financial negotiations of the Viceroy of the Hukwang, with special reference to the proposed Canton-Hankow Railway Concession.
2. With regard to the proceedings of Mr. Hillier, who, in the absence of Mr. Bland, was acting as representative of the British and Chinese Corporation. this gentleman appears throughout to have acted consistently in accordance with the engagements which devolved upon the Corporation as a result of their Agreement with the French group, but when the Viceroy declined to admit French participation, the matter practically passed out of his hands, and the question became one rather for diplomatic treatment, as M. Cambon has stated. Mr. Hillier's endeavours were directed towards finding a way out of the deadlock, and it was only with this object in view that he suggested the conclusion of a contract in the name of the British Syndicate alone, subject to a division of results between the various parties interested.
3. It must be pointed out that although the French group form part of the Chinese Central Railways, and will share in any business or enterprise undertaken by that Syndicate, their association with the British and Chinese Corporation is so far limited to the Canton-Hankow Railway, a preference in regard to which was granted to British capital by the Viceroy in consideration of China's having been furnished from British sources with the funds required for the repurchase of the Concession for this railway from the American Syndicate, who previously held it.
While His Majesty's Government are sincerely desirous of continued co-operation between the French and British groups in carrying out the enterprise, there would appear to be no advantage in an intimation being conveyed to the Viceroy at present, that no capital could be furnished from British sources unless he agreed to take the money as an Anglo-French loan in view of the Agreement which has been come to between British and French financiers.
The obvious rejoinder of the Viceroy, if such an intimation were made to him, would be that he had promised the preference to the British group; that he had no concern with any arrangements between that group and the French financiers; and that, failing a British loan, he would consider himself free to obtain the necessary funds from other nationalities.
In view, however, of the apparent determination of the Viceroy only to borrow for industrial purposes, without specifying the real object for which the money is required, and the consequent difficulty, if not impracticability, of raising a loan upon the European market, no other course would appear to be open than to let the matter remain in abeyance for the moment, and to wait until circumstances may permit of a modification of his Excellency's attitude.
Foreign Office,
1907.
7
CHINA RAILWAYS.
CONFIDENTIAL.
(26895]
No. 1.
33223
RECP (August 12-17 SEP 07
94
SECTION 2.
Sir J. Jordan to Sir Edward Grey. Received August 12.) (No. 305.) Sir,
Peking, June 25, 1907. ON the receipt of your telegram No. 72 of the 19th instant, I addressed a letter, copy of which I have the honour to inclose, to Mr. Kinder, asking his views as to the question of the infringement of the rights of the British and Chinese Corporation and the bondholders of the Chinese Northern Railway Loan by the agreement recently entered into between the Chinese and Japanese Governments for the reconstruction and administration of the Hsin Min Tun-Mukden line. Mr. Kinder telegraphed at once that he had full control of the line to the east bank of the Liao River, to which point the standard gauge was at work. He added that the British and Chinese Corporation had absolutely no cause for complaint, and that the Japanese attitude was most
correct.
In a letter which followed, and of which an extract is inclosed. Mr. Kinder amplifies these views, and gives further details of the practical working of the arrange- ment made with the Japanese. In addition to being in full control of the line to the east bank of the Liao, he has had a Japanese who has been four years in the service of the Chinese Northern Railways placed in charge of the section to the east of the river, with the title of Chief Engineer of "Liao Ho and Mukden Extension." The Japanese supervision of this part of the line, Mr. Kinder states, is merely nominal, and will not affect in any way its actual working.
This confirms the forecast of the Japanese Minister. Shortly after the conclusion of the Agreement of the 15th April last, I had a conversation with Mr. Hayashi, in which I pointed out to him that the new arrangement appeared to me to be in conflict with our Loan Agreements, and that possibly its enforcement might give rise to difficulties,
After a passing reference to our understanding with Russia, by which we were not to seek Railway Concessions to the north of the Great Wall, Mr. Hayashi said that it was not intended to enforce a strict interpretation of the Agreement, and that the working and administration of the Hsin Min Tun-Mukden line would be carried on in friendly co-operation with the Chinese Imperial Railway authorities.
The Japanese line, which was 3 ft. 6 in. gauge, is now being widened to the 4 ft. 8 in. gauge of the Chinese Imperial Railway, and through trains will in a few days be running to Mukden. This will be an immense convenience to travellers by the Siberian overland route, and will link up the South Manchurian and Eastern Chinese Railway systems with the Chinese Imperial Railway, whose traffic cannot fail to benefit greatly by the step.
I agree with Mr. Kinder that we have no cause for camplaint, and consider it a ease in which a broad view of our interests in railway affairs in China plainly dictates a policy of non-interference.
I should add that, the Japanese Minister being absent in Japan, I have not recently had an opportunity of speaking to him on the subject,
I have, &c.
(Signed)
J. N. JORDAN.
Dear Mr. Kinder,
Inclosure 1 in No. 1.
Sir J. Jordan to Mr. Kinder.
Peking, June 20, 1907.
A QUESTION has been raised by the British and Chinese Corporation in regard to the recent Railway Agreement between China and Japan, which stipulates that the existing light railway between Hain Min Tun and Mukden should be converted by the Chinese Government into a line constructed by themselves, and that half of the cost of the construction of the part on the east side of the Liao River shall be raised by loan from the South Manchurian Railway Company, during the currency of which
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