This Document is the Property of His Britannic Majesty's Governmext.)
C.O
CHINA RAILWAYS.
CONFIDENTIAL.
[30124)
No. 1.
271
35776 [September 9.]
Anal Season 4 OCT 07
Sir J. Jordan to Sir Edward Grey.-(Received September 9.)
(No. 367. Confidential.)
Sir,
Peking, July 25, 1907. THE inclosed report of the loan negotiations at Hankow which Mr. Hillier has addressed to his principals in London may be of interest as showing the conclusions which have been forced upon him by this abortive attempt to arrange a provincial loan. These are briefly that no sound progress can be expected in railway construction if the initiative is left to the provincial authorities, and that the obligations for this purpose should be undertaken in the name of the Imperial Government. Mr. Hillier goes on to outline a scheme for an international railway loan of a somewhat ambitious character with regard to which he sought an expression of my views on his return to Peking. Even were such an international combination desirable, a point on which I have some doubt, it appears to me that the present is not an opportune moment for putting it forward. One of the objects of the proposed loan is the redemption of the Peking- Hankow Railway, but there is no evidence that the Chinese wish to redeem it at present, and when they do they are likely to give the preference to the Belgians, with whose construction and management of the line they profess to be highly satisfied.
The question of including the Germans in such a loan would require careful consideration. We have already admitted the French empty-handed to share in our privileged position at Hankow, and the arrangement has scarcely proved such a success as to justify its extension. A combination of British, French, and German markets would doubtless, as Mr. Hillier states, hold the door of foreign capital, but the Chinese, finding themselves "cornered," might let the door remain closed and either abandon railway construction or carry it on in their own way.
At all events, I feel convinced that a multiplicity of proposals is undesirable at present. Two railway projects are under consideration, the Tien-tsin-Chinkiang and the Soochow-Ningpo lines, and all our attention should be concentrated upon these until they are cleared off.
In conformity with a promise which he gave to the Viceroy, Mr. Hillier, on his return bere, saw the Grand Secretary Na and explained to him the nature and scope of the loan negotiations at Hankow, Mr. Hillier forwarded to His Majesty's Consul- General at Hankow an account of the interview, a copy of which is inclosed. From this it will be seen that the Board of Finance bas assumed control over provincial borrowing, and that their approval is in future to be a condition precedent to the negotiation of foreign loans by the provincial authorities.
I am told, however, by a high Chinese authority that the Board is acting merely in self-defence. As the provinces are raising the question of foreign railway loans and propose to make the Board responsible for their repayment, the latter naturally wishes to retain the control of the arrangements. Na Chung-tang, it will be observed, stated that there was no objection in principle to foreign borrowing, but the declaration has little more than an academic interest, as it comes from a statesman whose Department is not directly concerned with the question.
I have, &c.
(Signed) J. N. JORDAN,
Inclosure 1 in No. 1.
Mr. Hillier to Mr. Townsend.
My dear Townsend,
Shanghae, July 12, 1907. Hankow Loan Negotiations.--I telegraphed to you from Hankow on the 9th instant the information that the Viceroy now proposes to admit the Germans as well as the French into the proposed Loan Agreement, and added that I was returning to Peking to
consult Sir J. Jordan and the Wai-wu Pu on the new situation thus created.
[2656 -4]
B