[This Document is the Property of His Britannic Majesty's Government.]
C.O.
CHINA RAILWAYS.
11287
[March 11.]
CONFIDENTIAL.
SECTION 1.
Rece
Pro ! APR OC
[9342]
No. 1.
Sir,
Messrs. Pauling and Co. to Foreign Office.--(Received March 11.)
26, Victoria Street, Westminster, London,
March 10, 1909,
I HAVE the honour to inform you that from Cable advices we have just received from Lord ffrench it appears that the Agreement for the issue of a loan of 3 millions for the Canton-Hankow Railway, which was signed on Monday between the Chinese Government and the Deutsch-Asiatische Bank, was signed in principle only, and that the details have still to be agreed between the two contracting parties.
It is therefore possible, in our opinion, for this loan still to be secured for British interests, and in British names.
"
The representative of the British and Chinese Corporation having refused to agree to grant the loan on Tien-tsin-Pukow terms, our representative, Lord french, on Friday, Saturday, and Sunday, made the most strenuous endeavours in interviews with the Viceroy, Chang-Chih-Tung, to be permitted to make an offer for the loan on our behalf, and in accordance with the instructions he has received from us.
Our representative did not intervene until the retirement of the agent of the British and Chinese Corporation from the negotiations.
The Chinese Government, however, ignored his request, and accepted, in principle, the offer of the German Bank to issue the loan of 3 millions on Tien-tsin-Pukow terms.
Our representative, Lord ffrench, holding that, under the 1905 Agreement, China is bound to accept a British offer, if it is equal to, or better than, any other offer submitted by any other nationality, and contending that, until his offer had been considered by the Chinese, they were not in a position to determine whether it was less favourable than the German offer, sought the support of the British Minister in Peking.
Lord ffrench represented to the British Minister that, in the event of the Chinese considering his offer for the loan was not so advantageous as the German offer, yet that he still claimed the British Minister's support for his contention that our firm were undoubtedly entitled to compensation, on the lines for which we ventured to ask for your support in our letter of yesterday's date, holding that even this minimum contract of 150 miles would be something saved for British interests from the German grasp.
In a written reply sent by the British Minister to Lord ffrench, the former informs our representative that the British and Chinese Corporation have the exclusive support of His Majesty's Government.
We venture to submit that there must be some grave misunderstanding on foot, for though His Majesty's Government's support has been avowedly given to the British and Chinese Corporation for a loan on Canton-Kowloon terms, rather than incur the risk of losing the loan, and the other material advantages which it carried, we had gathered clearly that every support was being, and would be, given to our represen- tative, in the endeavours he was making to secure a contract for this line. And the moment the British and Chinese Corporation had definitely refused to amend their offer of Canton-Kowloon terms, and had, therefore, ceased to appear as competitors with the Germans, we confidently anticipated receiving a very full measure of lis Majesty's Government's assistance in our endeavour to inforce China's adhesion to the 1905 Agreement, thus permitting us to make, we believe, a still more acceptable offer in Chinese eyes than that made by the German Bank. And we held this, especially, in view of His Majesty's Minister's despatch of February 1909 to the Wai-wn Pu, informing them that any renewed offer from other nationalities must first be submitted to him, before the Chinese definitely accepted it, in order to allow of that preferential position being accorded to British interests that the Treaty of 1905 insured.
We have, further, the honour to inform you that our Company is now prepared, and has some days ago definitely instructed its agent, Lord ffrench, to advance the 3 millions by way of loan to China at once, on terms which we believe will be so
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