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I pointed out to him that the Chinese were committed to us as far as the financing of the Canton-Hankow line was concerned and generally repeated the language which had already held with Mr. Gulland. American co-operation appeared to me unobjec. tionable from a political point of view, but competition was to be deprecated in the best interests of China herself, and I felt sure that he would not favour the introduction of Belgian capital under the guise of American. Our recent experience had taught us the necessity of stricter supervision over the spending of railway loans and, as an illustration of this, I furnished my American colleague privately with a copy of Mr. Tuckey's letter regarding the southern section of Tien-tsin-Pukow line.
Mr. Rockhill fully concurred in the views I expressed as regards co-operation and the need for satisfactory guarantees, adding that the Chinese had themselves told him of the special Agreement with us respecting the Canton-Hankow line. He evidently regarded the new departure in American policy as due to the initiative of Tong Shoa-yi in Washington.
Mr. Gulland has returned to Shanghae, but before leaving he told me that an American representative of the bank would soon come to Peking to continue the negotiations.
In the meantime, Chang Chib-tung has ordered three officers to come up here from Wuchang to represent the provinces of Hupei and Hunan in the forthcoming negotia. tions, but until to-day he gave little sign of proceeding to business.
As this is being written he has sent a message asking to see Mr. Bland who has, however, gone to Tien-isin.
The accompanying Report from Canton gives an interesting account of the progress that continues to be made at that end of the line.
(No. 77.) Sir,
I have, &c.
(Signed)
J. N. JORDAN.
Inclosure 1 in No. 1.
Consul-General Fraser to Sir J. Jordan.
Hankow, December 7, 1908. BEGGING reference to my despatch, No. 68, of the 23rd October, I have the honour to forward a translation of certain pertinent queries put by the Viceroy Ch'en to the gentry and merchants who claim that the Hankow-Ichang section of the line to Szech'uen should be entrusted to an unofficial Company promoted by them.
It is interesting to find a Viceroy confessing officially the proved hollowness of the agitation against the Shangbae-Hangcbow-Ningpo railway loan and the want of con- fidence on the part of the shareholders in the Canton Railway Company.
The present financial crisis in Hankow is trying severely the standing of the chief promoter of this Railway Company and he has already had to ask for lenience in regard to his promised contributions for public works.
However cleverly disguised, the rental share scheme amounts to nothing else than railway building by forced contributions on the part of the landowners and farmers, whom the depreciated copper currency has already impoverished and who have recently suffered from floods. The natural method to insure universal profit-sharing" would of course be prompt construction with borrowed funds secured on provincial revenues with an undertaking that the net profits should for all time he applied in reduction of provincial taxation.
I have, &c.
(Signed)
Inclosure 2 in No. 1.
E. H. FRASER.
Extract from the " Kung-lun Pas" of December 5, 1908.
Minute of the Hukuang Viceroy calling for information on certain points in connection with the proposal to make the Hunkow-Ichang Railway an unofficial undertaking.
(Condensed Translation.)
WITH reference to the joint petition of certain gentry and merchants advocating this proposal, and asking my support thereof, the Grand Secretary Chang inquires by
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telegraph what is intended by a purely commercial undertaking, and also aske for my opinion. Such an important matter cannot be lightly decided, and the advocacy of the Hupei gentry and merchants cannot be gauged simply by words. I am therefore anxious for a genuine report on the following essential points:-
1. So great and expensive an undertaking needs for its inception due financial security. In its memorial of July last the Board of Communications estimated the cost of the whole stretch from Ichang to Kuangshui (over 1,200 ) at 30,000,000 of taels. On the strength of the total present subscription, which is some 3,800,000 taels-less than 10 per cent.-it would be futile to try to convince the Board that the petitioners can find the whole cost of the line they want to keep to themselves. During the Kiangsu and Chehkiang agitation against a foreign loan, every district subscribed from several lakhs to several millions, but when it came to paying, some found only 10 per cent., others under 1 per cent. in hard cash, and the Board's fund has perforce had to be drawn upon. Perhaps the petitioners do not know this, or that the subscribers of the tens of millions of shares taken up for the Kuangtung section of the Hankow- Canton line show so much hesitation over paying the second call that the Company is in despair. The want of perseverance in these cases should make the Hupai people wary of starting the undertaking without counting the cost.
2. The first section of the proposed trace goes from Hanyang by way of Hsien Tao Chen to Shashib, the second from Shasbih through Tang-yang and Ichang, the third from Tang-yang by I-ch'eng to Sing-yang. Hanyang is to be connected by a bridge with the Peking-Hankow line so as to save the Siang-yang-Kuangshui section. The builders must observe this trace for which his Excellency Chang has obtained Imperial sanction, and the Board's time limit for completion is five years,
3. For a vast work there must be full funds assured, and also proper arrange- ments to secure support. His Excellency Chang's proposal to follow the Szuchuen and Hunan precedents of rental shares is not meant to burden the people, but to assure universal help. Wuchang and Hankow traders' three millions odd are trade funds, not the funds of the whole Hupei population. If all the sixty odd districts collect a rent, along with the taxes, and allot shares accordingly, the remotest hamlets' charge will gain a part of the benefit of being shareholders, and the gain will be wide- spread as suggested in the joint letter of Hupci gentry resident in Peking, who add that the project needs official support to succeed. The Peking and the Hupei gentries' views are thus in antagonism, and one would like to know what scheme will insure universal shareholding and universal profit-sharing.
4. His Excellency Chang originally intended to have the line built section by section with funds collected by Hupei authorities and gentry, and only when the trace was somewhat changed on survey did he decide on merchant work under official superintendence. These procedents of two years ago indicate that each class should do its own raising of funds and co-operate in the working. The letter from the gentry in Peking suggests Messrs. Yao and Liu going there to help in arranging, and insists on the necessity for co-operation between officials and gentry, each providing half the funds. Yet the provincial petition wants neither construction by the Board, nor official share in the scheme which is to be entirely unofficial-an idea incongruous neither with the Imperially sauctioned proposals, nor the Peking gentry's views. Application to the Throne would mean reference to the Board which would report the present proposal I am repugnant to previously approved proposals, and so no good would result. delighted at Hupei gentry and merchants' eagerness to back their proposal, but a line thus beneficial to the province requires general deliberation by officials, gentry, traders, and people who must beware of prejudices as of upsetting the original scheme, must provide tangible funds, define the powers of officials and merchants in the work, draft satisfactory permanent rules, and practically map out each year's work. After these conditions are fulfilled, application to the Throne for leave to reopen the question might prove successful,
I shall be very glad to receive from the officers of the railway bureau, together with those employed, and all the Hupei gentry, categorical replies embodying the results of their thorough consideration of these points.
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