2
advantageous to the Chinese-as to completely outweigh any advantages which may have been contained in the preliminary German offer of that sum on Tien-tsin-l'ukow
terms.
It is our firm opinion that China will thus have no alternative but either to accept our loan, if His Majesty's Minister gives it his strong support, or, alter- natively, to allow us, by way of compensation, a contract for the construction of not less than 150 miles of this railway.
By giving our Company their support at this critical moment His Majesty's Government will, in our opinion, secure for Great Britain both the loan with the contract and a large share of the material required.
May we venture at this juncture to call your attention respectfully to the very serious account that appeared in the "Times" yesterday of the manner in which the Chinese Government have squandered the last 1 millions of British money intrusted to them for railway construction ? Surely no further facts can be needed to prove the validity of our contention that, both in the interests of the Chinese and in the interests of British bondholders, all loans for railway construction should be accompanied by a definite contract, if possible, under British direction.
We have also the pleasure to inform you that, so strongly does the French Government hold this view, that it has categorically informed the Banque de l'Indo- Chine and the other leading French Banks acting in China that it will not permit henceforth the quotation of any Chinese loan on the French Bourse unless those loans have been granted with a contract condition for construction attached to them in terms of the Agreements come to between ourselves and the Franco-Belgian group, and which Agreements have been submitted to the French Government, and have elicited from the French Government their marked approval, as indicated above.
Owing to the critical position of affairs and the urgency, which is extreme, of intervening at the last moment to endeavour to save this business for Great Britain, we would most humbly and respectfully beg that you will be good enough to accord us to-night the decision of His Majesty's Government on the points we have raised and the requests we have made in our letter of yesterday and of this present date.
We are, &c.
Pauling and Co. (Limited),
(Signed) JNO. SCOTT, Secretary.
[This Document is the Property of His Britannic Majesty's Government.)
CHINA RAILWAYS.
CONFIDENTIAL.
[9257]
Sir,
C.0.
11287
[March 11.]
REC Race 1 APR 09
SECTION 2.
No. 1.
Foreign Office to Messrs. Pauling and Co.
Foreign Office, March 11, 1909. IN reply to your letter of the 9th instant, I am directed by Secretary Sir E. Grey to inform you that he does not understand upon what basis Messrs. Pauling and Co. claim compensation from the Chinese Government in connection with the Canton- Hankow Railway Construction Scheme. The Chinese Government do not appear to have promised them the contract for the railway, or, so far, to have refused to pay them for the survey work which they are carrying out.
In these circumstances, Sir E. Grey does not see his way to putting forward a claim for compensation from the Chinese Government.
[2193 -2]
I am, &c.
(Signed)
F. A. CAMPBELL.
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