Dear Sir John,
Inclosure 3 in No. 1.
Lord ffrench to Sir J. Jordan.
Peking, February 19, 1909. I HAVE the honour to inform you that I have received a cable from Messrs. Pauling and Co. authorizing me to discuss an arrangement by which the Japanese, as represented by Mr. Odagiri, should participate in the profits of any construction contract which Messrs. Pauling and Co. may obtain in China.
When I saw you on the 16th instant you informed me that you deprecated any dealings on my firm's part with the Japanese. I should therefore be much obliged if you would officially inform me in writing (so as to avoid mistakes) whether there is any objection on the part of the British Government to any scheme by which the Japanese would participate in the profits of my firm under a general Agreement. If so, it will be necessary for me to cable to my Board.
In the event of any Agreement being arranged, it would naturally be subject to the terms of the Agreement made between his Excellency Chang Chi Tung and Consul-General Frazer on the 9th September, 1905, and its terms would of course be submitted to yourself.
Yours sincerely, (Signed)
FFRENCH,
P.S.-In view of the statements made to me by Mr. Odagiri, it would appear that he is in a position to induce his Excellency Chang Chi Tung to reconsider his decision in regard to construction contracts, and this being the case, I should be incurring a serious responsibility to my firm if I were to decline bis overtures without reference to my Board, and looking at the matter from a purely business point of view, I venture to suggest that my firm, having completely failed after many years' work in its efforts to obtain a footing in China, can hardly be expected to sacrifice on political grounds what appears to be a reasonable prospect of success.
I venture also to observe that my firm's interests have already been sacrificed to political conditions in the case of the Fakumen Railway, and that if they are now offered a way out of these difficulties and some prospects of profitable business in partnership with the Japanese (or any other nationality), it seems to me that they would naturally give the matter serious consideration, since the alternative seems to be retirement from China.
Inclosure 4 in No. 1.
Memorandum of Interview between Lord french and Mr. Odagiri,
FF.
ON the 9th February I wrote to Mr. Odagiri asking him to see me on a matter of business. He came to my house at 4:30 in the afternoon of the same day.
I taxed Mr. Odagiri with influencing his Excellency Chang Chi Tung against us in the matter of a construction contract on the Yueh-Han Railway. He did not specifically deny this, but said he had not interfered in the loan. I told him that his Excellency Chang Chi Tung had in the first instance practically agreed to a construc- tion contract, but later on had changed his mind, and that the Delegates admitted that he had been made to change that there was no doubt in my mind that Mr. Odagiri was responsible for the change, and that I wanted to know if he had any proposal to make which would remove the opposition. I further told him that he must clearly understand that I could not agree to anything without cabling to my Board, and that for all I knew Pauling and Co. might refuse any proposition. I made it clear that no proposal could be entertained which would modify the British Govern- ment's interpretation of the 1905 Agreement, and that I could not bind the British and Chinese Corporation in the matter.
After some consideration, Mr. Odagiri suggested that the formation of a Syndicate, for undertaking construction contracts in China, in which the Yokohama Specie Bank should participate would meet the case, but added that this was his personal view, and that he would have to consult bis principals. After again laying stress on the fact that I had not consulted my Board in London on the matter, and that therefore I could not bind them in any way even to the principle of dealing with him, I said that any
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proposition he would make 'with regard to a Syndicate could only be acceptable if it recognized the complete and undivided control by Pauling and Co. He then questioned me as to Japanese rights under the 1905 Agreement. I told him that that was an Agreement between the British Government and the Chinese, and not between the Japanese Government and the British. He said that the Agreement in question had been communicated to the Japanese Government by the British Government.
I said that, speaking personally, I thought that the Japanese were entitled to claim what was set forth in that Agreement, but that it seemed to me to be a very small advantage, and that they were not entitled to any materials or profit, but simply to the employment of half the engineers, which in my opinion would make the line rather a patchwork business. I also reminded him that the Japanese had no apparent rights at all if the loan were not a British one. This he admitted.
He finally asked me did I want the contract to go through before the loan.
I replied that I wanted the contract to go through, not necessarily first, but that if the loan went through first I should naturally like a guarantee that the contract would follow,
Mr. Odagiri then left after promising me to let me have his proposals as soon as he heard from his principals.
Inclosure 5 in No. 1.
Sir J. Jordan to Lord ffrench.
Dear Lord ffrench,
Peking, February 20, 1909. 1 HAVE received your letter of yesterday's date, in which you inform me that you have been authorized by Messrs. Pauling and Co. to discuss with Mr. Odagiri an arrangement for Japanese participation in railway construction contracts" in
China.
You ask if there is any objection on the part of the British Government to such a scheme, and the inquiry is, I understand from your letter, made with special reference to the Canton-Hankow line.
In reply, I beg to inform you that some days ago Messrs. Pauling and Co. represented to the Foreign Office the difficulties they were encountering from Japanese interference in the Canton-Hankow negotiations, and asked that I should be authorized to take steps to get this opposition withdrawn.
Acting under instructions from His Majesty's Secretary of State, I saw the Japanese Minister on the 16th instant, and" obtained from Mr. Ijuin an official assurance, which he authorized me to communicate to His Majesty's Government, that Mr. Odagiri would in no way intervene in the Canton-flankow negotiations.
If, therefore, Messrs. Pauling and Co. wished to know whether there is any objection to their reversing their previous decision, they should have applied to His Majesty's Government, and I regret that I cannot, consistently with the action I have already taken, give my support to the scheme indicated in your letter.
I am instructed to support the British and Chinese Corporation exclusively in the conduct of the Hankow negotiations, and in the absence of definite instructions from His Majesty's Government I must continue to deprecate any overtures for Japanese participation in that undertaking.
I am, &c.
(Signed)
J. N. JORDAN,
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