[This Document is the Property of His Britannic Majesty's Government.] 579
CHINA RAILWAYS.
CONFIDENTIAL.
[5712]
C.O. 8782
[February 11.]
SECTION 2.
RECO
No. 1.
REGP 12 MAR OF
Mr. R. Harris to Foreign Office.-(Received February 11.)
Dear Sir Francis Campbell,
26, Victoria Street, Westminster, London, February 10, 1909.
I BEG to inclose for your private information a copy of a cablegram received to-day from Lord #french.
I would also like to tell you, for your private information, that on Saturday Baron Emile d'Erlanger and myself, representing Messrs. Pauling and Co., signed definite Agreements with the highest financial groups in Belgium, and that I am proceeding to-night to meet Baron Emile in Paris to sign similar Agreements with the French groups, to provide for which a special clause was inserted in our Belgian Agreement.
The object aimed at by Baron Emile d'Erlanger in this Agreement is to prevent the Chinese receiving loans for railway construction purposes without the security afforded to bondholders of a contract being attached thereto, and you will be glad to hear that a major participation in all contracts has been secured for united British interests. With the exception of agreed-upon lines, to be reserved as more particularly belonging to French interests, Great Britain will have a majority both on the Board of Directors and in the control of the policy of commercial direction with regard to all Chinese contracts obtained.
Pending receipt of information that Mr. Addis will loyally pursue the policy outlined in the Agreements made between the British and Chinese Corporation and Panling and Co. on the 13th June, 1907, and the 11th December, 1908, our instructions to Lord ffrench hold good, viz., that, in the event of the Hong Kong and Shanghae Bank granting loans to the Chinese without the security of a contract being attached thereto, he is authorized, on our behalf, to make an appreciably better loan offer to the Chinese, but with a contract attached; and on this point might I refer you to the personal letter addressed to you last week by Baron Emile d'Erlanger.
Viewing the above, and remembering what you were good enough to say then. that the British Foreign Office in no sonse recognized the Japanese claim to the appointment of half the engineers on the Canton-Hankow Railway construction line, you will realize our astonishment on receipt of the inclosed cable from Lord ffrench which reached us to-day.
We have replied to Lord ffrench, categorically refusing to accept the Canton-- Hankow contract on the basis of a participation by the Japanese in that contract, or in any of our contracts in China.
It would be, I am sure, a cause of intense astonishment to our French and Belgian allies were we to admit for one moment this astounding claim of the Japanese to share in British or European railway construction contracts in China.
Baron Emile has told me that he is deeply considering the possibility of a future participation in some form or other of German capital, not in the form of contract participation, because to our certain knowledge the Germans at the present moment Baron Einile, however, have no group capable of competing for construction contracts.
sees no reason for anything further than, possibly in the future, a financial participation in loans, or perhaps a participation in the material to be furnished for contracts obtained.
I am crossing over to-night to meet Baron Emile, and shall be at the Hotel Scribe, Rue Scribe, to-morrow; and as we shall be meeting the leading French finance, should you care to address a line to Baron Emile or to myself at that address conveying any advice you could give us personally, I need hardly say we should be much obliged
for it.
We have asked Mr. Percy Browne to call upon you to-morrow in support of our views regarding this Japanese claim.
Yours, &c.
(Signed)
RUTHERFORD HARRIS.
[2150 -2]