This Document is the Property of His Britannic Majesty's Government.]

AFFAIRS OF CHINA.

CONFIDENTIAL.

[36678]
No. 1.
270
[October 22.]
SECTION 2.
42997
24 NOV 06

Sir,

Colonial Office to Foreign Office.--(Received October 22.)
Downing Street, October 21, 1908.

I AM directed by the Earl of Crewe to transmit to you, to be laid before Secretary Sir E. Grey, a copy of a despatch from the Governor of Hong Kong with regard to the telegraph line from the Chinese border across the leased territory to Kowloon, which has hitherto been worked by the Imperial Chinese Telegraph Administration.

2. The question of allowing the Chinese Telegraph Administration to continue to operate in British territory was raised by Sir M. Nathan in 1904. A copy of his despatch is inclosed. After consulting Sir Matthew, it was decided to take no action at the time, in order to avoid the possibility of prejudicing the negotiations regarding the Canton-Kowloon Railway, which were then in progress.

3. Sir F. Lugard, in view of the contemplated absorption by the Chinese Government of the Chinese Telegraph Administration, now calls attention to the question, and suggests that diplomatic action should be taken with a view to removing the terminal office to the Chinese frontier, when other arrangements could be made for the working of the section in the Colony.

4. Lord Crewe would be glad to receive Sir E. Grey's observations on the Governor's proposal.

I am, &c.
(Signed)
R. L. ANTROBUS.

(Confidential.)

My Lord,

Inclosure 1 in No. 1.
Governor Sir F. Lugard to the Earl of Crewe.
Government House, Hong Kong, September 3, 1908.

I HAVE the honour to invite your Lordship's attention to Sir M. Nathan's despatch of the 10th October, 1904, concerning the Imperial Chinese Telegraph Administration, to which no reply has hitherto been received,

2. In paragraph 10 of this despatch my predecessor alluded to the fact that the shares in the Administration were held by private individuals, but stated that it was beyond doubt that the control was in the hands of Chinese officials.

3. My attention was drawn to this matter last month by notices appearing in the native press to the effect that the Chinese Government had decided to redeem the shares held by private individuals in the Imperial Chinese Telegraph Administration, with a view to incorporating the Administration in the Imperial Government Telegraphs, and I referred to the Acting British Consul-General at Canton for confirmation of these notices.

4. I inclose copy of the Acting Consul-General's reply, dated the 18th ultimo. Mr. Fox states that the Administration in question has never been a bona fide commercial undertaking, but has always been, both as regards finance and administration, under Government control, and he informs me, upon the authority of the Superintendent of Telegraphs at Canton, that the Board of Communications in Peking have been instructed to take over the administration of telegraphs throughout the Chinese Empire, and that with this end in view the Board have for some months past been negotiating with the shareholders in the Administration for the purchase of their shares.

5. In these circumstances I consider that the strong objections felt by Sir M. Nathan to allowing the Telegraph Administration to continue to operate in British territory have gained in force. The legislation proposed by my predecessor was in my opinion a good solution, in view of the plea at that time put forward that the telegraphs were a quasi-commercial concern in which private money was invested, but your Lordship will, I think, agree with me that now that the telegraphs are in process of...

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