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February was "invalid," and stated that other proceedings would have to be taken for the adjustment of the interests of Chang Yen Mao and the Chinese shareholders on the one hand and the Chinese Mining and Engineering Company on the other hand. Chang Yen Mao then returned to China to report the result of the proceedings to his Government, and intended returning to prosecute his further claims.
The Chinese Mining and Engineering Company appealed against the decision of Mr. Justice Joyce, and the Court of Appeal held that, as the Company was under the Companies Acts, Chang Yen Mao could not retain his position as Managing Director, and that the control of the Company must be in the hands of the Directors of the Company in England.
The Court of Appeal did not interfere with that part of Mr. Justice Joyce's judgment which stated that the second transfer was "invalid," and therefore the Court of Appeal must be taken to have confirmed that part of his judgment.
The judgment of the Appeal Court being against Chang Yen Mao with regard to the control and administration of the mines, the Chinese Government deprived Chang You Mao of all his honours and position, and otherwise punished him until he became practically a pauper, and had to sell his household goods in order to keep his family.
The British flag was hoisted at the mines, a British military officer was engaged as the mines Manager, and the Chinese Government not unnaturally concluded that the mines were under British protection.
The
Within the last few months, the Chinese Mining and Engineering Company having practically exhausted all the coal in the colliery originally transferred to them, and some moneys being acknowledged to be due from the Chinese Mining and Engineering Company to the Chinese Government for royalties and taxes, and to Chang Yen Mao under the original Agreement with him, which moneys amounted to about 300,000l, the Chinese Mining and Engineering Company sought the support of the Foreign Office in order to induce the Chinese Government to accept that sum of 300,000l, and admit the validity of the second contract, which embraced property of the estimated value of from 4,000,000l. to 6,000,000l. The Chinese Mining and Engineering Company have suppressed and concealed from the Foreign Office the fact that Mr. Justice Joyce and the Court of Appeal held that the second document transferring the larger area was "invalid." British Minister in Peking, notwithstanding the note of the Chinese Government of 1898, notwithstanding the fact that the property is outside a Treaty port and cannot legally or morally be held by a foreign Company (without the ratification of the Throne), and suppressing the fact that the Chinese Government, and the Chinese Government only, are the legal and proper owners of the property, and that Chang Yen Mao was nothing more than a trustee for the Government, and had no power to transfer it, is now pressing the Chinese Government to admit the validity of the second transfer; and the Chinese Government, in consequence of the British flag flying, and the British officer being in charge, and the pressure of the British Minister, still believe that for some occult reason the British Government are supporting what they strongly contend is an attempt to illegally and improperly deprive them of property of great value.
The case in question is exciting the greatest possible interest not only in Peking but throughout the whole of China where Anglo-Chinese reside, and the position of matters is the greatest mystery to everybody.
It is a well-known fact that the Chinese Mining and Engineering case has been responsible for the loss of much British prestige in Peking, responsible also for the disregard by the Chinese officials of foreign aspirations for the development of China, and is entirely responsible for the refusal of the Chinese to issue proper Mining Regulations in accordance with the Mackay Treaty.
The Chinese Government, through Sir Walter Hillier, their adviser, appreciate the fact that many of the debentures and shares issued by the Chinese Mining and Engineering Company are in the hands of innocent holders, and although they contend that the whole of the transaction has been fraudulent, they are prepared to give to the debenture-holders and shareholders the full face value of their debentures and shares, by giving Government bonds in exchange for the debentures and shares, which bonds can be secured by a charge upon the whole of the property. Acting under advice, this offer is made without prejudice to the rights of the Chinese Government to resist the admission of any legal or moral claim whatever to the extended area.
It is respectfully submitted that this would be a happy solution of this very vexed question, and that the result of an amicable settlement on those lines would re-establish British prestige and cement the closest terms of friendship between the two Governments. The Chinese Government naturally feel, with their ignorance of British law,
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that, although the Judges have proclaimed this transaction to be a fraudulent one and have expressed their sympathy with Chang Yen Mao, British law is not able to do justice to them, and that, Chang Yen Mao having failed in the Courts, the British Minister is pressing them to admit the validity of what they know to be absolutely invalid. It must be remembered that the only question before the Court was a question of differences between Chang Yen Mao and the Chinese Mining and Engineering Company as to administration, and that the Chinese Government are not a party to the suit, and the Court has never been asked as to whether the property really belongs to the Chinese Government or not. There can be no doubt whatever that if the question came before the Court it would be held that neither Chang Yen Mao nor the Chinese Mining and Engineering Company had any title to the property, and if the proceedings should come on and the Court held that to be so the Chinese Government could not then be expected to treat the debentures and shares issued by the Company as binding upon them, and in this event both the debenture-holders and the shareholders would have lost all their money.
It must be borne in mind that all mines in China are laced to the prerogative of the Crown the same as the gold and silver mines of England are to the British Crown, and that Chang Yen Mao had no more power to dispose of these mines to a foreign Company than the lessee of a British Crown mine in Wales would have power to transfer the mine to a Chinaman without the express permission of the British Crown so to do.
The present feeling of the Chinese Government is to resist to the utmost the claim of the Chinese Mining and Engineering Company to the extended area. They are sinking shafts outside the area comprised in the first deed of transfer, and, although Sir John Jordan has used all his influence to induce them not to proceed with their work, they insist upon doing so, and they are not likely to give in unless the greatest pressure is used by the British Minister, If this pressure is brought to bear and they are compelled to admit the validity of the second deed of transfer, which Mr. Justice Joyce has held to be "invalid," and if their note of 1898 is to be disregarded, and an area of valuable land is in their opinion unjustly handed over to a foreign Company without the ratification of the Throne, there is no doubt whatever that the Chinese Government will find ways and means of retaliating against England as they lately did against Japan. On the other hand, if the facts disclosed in this communication are considered sufficient justification for the withdrawal of the support of the British Minister, the development of China, both with regard to her railways and her mines, would in the future be to a great extent under British control.
I came to England specially to lay these facts before the Foreign Office, having satisfied myself that the Chinese Government, smarting under what they consider to be the greatest injustice in this case, not only refused to entertain my claim for consideration, but that all future British interests would be jeopardized by a continuation of the support of the Chinese Mining and Engineering Company.
(Signed)
I am, &c.
W. PRITCHARD-MORGAN.
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