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must be controlled by the Chinese Central Railways, the above proposal could still be realized, but in that case the Paris office of the Chinese Central Railways would manage the Hankow-Peking concern, the London office of the new Company to be formed having the management of the Hankow-Canton line. All profits accruing from the Hankow-Peking line would, in that case, belong to the Chinese Central Railways, whereas the profits of the Hankow-Canton line would go to the new Company to be formed.
In any case, a French Company would be formed which would take up, amongst other aims in China, the rights granted to the French group by the Hankow-Canton Agreement.
The said French Company would, at the proper time, discuss with the British and Chinese Corporation the allotment, either re the Hankow-Canton Railway or re the whole of the Peking-Hankow-Canton line, of the rights to be respectively exercised by the English group and by the French group according to the above-mentioned basis.
If Mr. Addis' group agrees to these proposals, it would be useful that he should let it be known to Mr. Simon without delay, in order that the latter may settle the matter and take the necessary steps with the French Foreign Office, so that the latter may instruct the French Minister in Peking to support the negotiations of the British and Chinese Corporation's representative specially as regards the Hankow-Peking concern.
[This Document is the Property of His Britannic Majesty's Government.]
CHINA RAILWAYS.
CONFIDENTIAL.
[5951]
No. 1.
[February 20.]
SECTION 2.
British and Chinese Corporation to Foreign Office.-(Received February 20.)
Sir,
22, Abchurch Lane, London, February 19, 1908.
WE beg leave to request that the following statement may be laid before Sir Edward Grey:
In November last, in order to meet the trade requirements of the region in which Fakumen is situated, the Viceroy of Manchuria concluded an Agreement with Messrs. Pauling and Co. (Limited), contractors, of Westminster, for the construction by them of 50 miles of railway, from Hsinminting (the present head of the Imperial Railways of North China) to Fakumen, a town on the same (west) side of the Liao River.
At the same time the Viceroy of Manchuria concluded an Agreement with the British and Chinese Corporation to issue on behalf of the Imperial Chinese Government a loan of 500,000l., to meet the cost of constructing the contemplated extension,
The Japanese Minister immediately entered a protest against the construction of the railway, on the ground that the Chinese Government had given an undertaking to the Japanese Government in 1905 not to construct any main or branch line of railway competing detrimentally with the South Manchurian Railway.
We beg leave to inclose herewith a Report by our consulting engineers, Sir John Wolfe Barry and Mr. A. J. Barry, in which they show that the proposed extension cannot with any reason be held to infringe the Chinese undertaking of 1905.
We also beg leave to quote the concluding clause of a memorandum which Mr. Bland, our representative in Peking, submitted to His Majesty's Minister in Peking last December:-
"The proposed extension of the Imperial Railways of North China is intended to tap a region which is at present without outlet; not one-tenth of its potential trade can be developed without improved means of communication. The line at its most eastern point will be considerably over 30 miles to the west of the South Manchurian Railway, separated therefrom by the Liao River, so that the alleged detrimental competition with the South Manchurian Railway cannot be seriously regarded. Only by asserting a claim to construct branch lines westwards could the Japanese railway obtain the trade of this region. By recognized practice throughout the civilized world the proposed extension of the Chinese railway system is legitimate and usual, and to dispute China's right thus to promote her interests must involve the admission of an exclusive policy such as that which characterized the policy of Russia before the war.'
We are fully in accord with the opinions expressed by the consulting engineers and Mr. Bland, and would further ask your permission to state that we can hardly believe it possible that the arrangement concluded by the Governments of Japan and China (to which reference has been made) contemplated placing China in the position of being unable to develop, for commercial purposes, a valuable and important section of the province in which the suggested railway would be constructed.
We venture to express the hope that the facts now submitted may appeal to Sir E. Grey, and that he may see his way to take such steps as he may consider proper to induce the Japanese to withdraw their opposition to this legitimate piece of railway construction urgently needed for trade purposes.
We are, &c.
The British and Chinese Corporation (Limited),
(Signed) W. KESWICK, Chairman.
[2856 u-2]
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