[This Document is the Property of His Britannic Majesty's Government.]
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RED [December 19 JAN 08
CHINA RAILWAYS,
CONFIDENTIAL.
[40883]
No. 1.
SECTION 2.
(No. 511.) Sir,
Sir J. Jordan to Sir Edward Grey.-(Received December 14.)
Peking, October 30, 1907. WITH reference to my despatch No. 406 of the 16th instant, on the subject of the Tien-tsin-Yang-tsze railway negotiations, I have the honour to inclose a copy of Article 18 of the draft Agreement in its revised form, whereby the Syndicate Banks are appointed agents for the railway during construction for the purchase of imported materials at a commission of 5 per cent., proference being given to goods of British and German mauufacture.
On the 25th instant the Chinese yielded on the question of the price at which they should take the loan, and offered 937. This was at once communicated to the Syndicate in London and Berlin, and on receipt of their acceptance the financial negotiations can be concluded,
In regard to the special arrangements between Germany and Chiua for the modification of the Kiao-chau Railway Convention, the position, as explained to me officially by Mr. Liang at the Wai-wu Pu on the 29th instant, is as follows:---
Germany has now agreed to consider the construction of the section of the Tien-tsin-Yang-tsze Railway which will connect Chinan-fu with Techon, on the north-west boundary of Shantung, as fulfilling the Treaty stipulation allowing her to extend the Kiao-chau-Chinan-fu Railway to the border of the province.
Germany agrees, after the signature of the Tien-tsin-Yang-tsze contract, to modify her rights in regard to the Kiao-chau-Yichow line and its extension to Chinan-fu through Lai-wu Hsien. She agrees, in effect, to give up altogether the Yichow-Chinau-fu extension, and to recognize the section of the Tien-tsin-Yang-tsze line running southwards from Chinan-fu as taking its place. Mr. Liang stated that this section would actually run from Chinan-fu to Yichow, but of this I do not feel quite satisfied, as it involves a large detour. She further agrees in regard to the Kian-chau-Yichow line that, when the Tien-tsin-Yang-tsze contract has been signed, she will be prepared to negotiate with China on similar terms for the construction. of this railway.
China on her part agrees, with regard to the two lines running east and west, to connect the Tien-tsin-Yang-tsze Railway with the Peking-Hankow Railway, referred to in Sir Ernest Satow's despatch No. 311 of the 23rd October, 1902, and Mr. Townley's No. 209 of the 29th May, 1903, that she will build these herself with Chinese capital, or, in the event of requiring foreign capital, that she will apply to Germany for a loan.
Following upon these arrangements with Gerruany, the Chinese negotiator has now informed Mr. Bland that it is also desired to come to an understanding with the Chinese Central Railways (Limited) regarding the P'uk'ou-Sinyang Concession before the Tien-tsin-Yang-tsze Agreement can be signed. His proposal to Mr. Bland is that the Syndicate should give a formal assurance that they will settle for this railway on the same terms as for the Tien-tsin-Yang-tsze line, but without compensation for profits.
Mr. Bland has referred the question to his principals by telegraph, and I have informed Liang Ta-jên, who consulted me on the subject yesterday, that he can hardly expect the Syndicate to waive their rights under the Preliminary Agreement without some quid pro quo.
I have, &c. (Signed) J. N. JORDAN.
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