This Document is the Property of His Britannic Majesty's Government.
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# CHINA RAILWAYS
## CONFIDENTIAL
[2794]
No. 1.
[January
IR 20 FEE 08; SECTION 1.
Sir Edward Grey to Sir C. MacDonald.
(No. 12.) Sir,
Foreign Office, January 25, 1908. THE Japanese Ambassador told me on the 21st January that in 1905, after the cession of the Russian rights in South Manchuria to the Japanese, he had obtained from the Chinese a promise that they would not make any line competing with the South Manchuria Railway, or any branch which would injure it.
The railway for which the Chinese had now given a contract was the very line which Baron Komura had in his mind when getting this promise. The Japanese Government had, therefore, protested to the Chinese some time ago against this railway being made. They had protested again only two or three days before the contract was signed. The Chinese therefore knew very well what they were doing.
The South Manchurian Railway was the only paying concern which the Japanese had obtained from the war. Corea, for instance, was costing them money—not bringing it in. Even the railway was not paying, though it would do so in the future. It was, therefore, impossible that the Japanese should allow a competing line to be made, and they would have to take whatever steps were necessary to prevent it.
I told him we had already instructed Sir John Jordan that we could not press the railway if it really was a competing line, though British people who were interested in it commercially contended that it was not a competing line.
We were not interested in it politically in any way—that is to say, it was in no sense a British Concession. The Chinese had given the contract to Messrs. Pauling, a well-known firm who had made railways in Africa, and we had given the firm the support which we gave to any British firm engaged in commercial enterprise in any part of the world.'
We had not taken any steps to promote the making of this particular line, but we had recommended the firm to the Chinese as one of good reputation, in case they should wish to employ them for their own purposes.
I am, &c.
[2815 bb-1]
(Signed)
E. GREY.