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doubt through a German source, and had been used to induce the Chinese to conclude a hurried arrangement with one of the groups of that combination.
Whatever my opinion might be of the step taken by Mr. Cordes, I confess that I felt a certain difficulty in attaching serious blame to the Chinese for their share in it. The claim to the refusal of the lowest offer, which I stated in my letter of the 23rd February to Liang Tun-yen, appeared to me not easy to press in a case where we declined to make any offer whatsoever on the conditions laid down. And knowing that bebind our refusal to make an offer we were forming a combination for the purpose of coercing the Chinese financially, it seemed to me all the more difficult to level a charge of breach of faith which could bear equitable examination. Moreover, the whole transaction was so peculiar that I could not but assume that some sort of solution would be found in Europe, and it behoves me to avoid taking any action which might embarrass the financial groups in their efforts to put matters straight.
I endeavoured to see Liang without delay, but did not succeed until the afternoon of the 9th March. He said that Chang's arrangement with Mr. Cordes was definite, whereupon I invited his serious attention to my letter of the 23rd February, and our special claims to consideration which had been ignored. By arrangement I saw him again next day, and had a long conversation, in which I emphasized our view of Chang's obligations to us, and made it clear to him that the whole matter appeared to me so grave that I must await the instructions of His Majesty's Government. He said that he felt very sorry for the turn affairs had taken, and would do anything in his power to make amends, but again affirmed that Chiang was committed to the Germans.
He appeared to know accurately what had happened in Europe, and excused what Chang had done on the ground that the British and Chinese Corporation were "making a corner against us." They had, he said, secured the adhesion of the French to a minimum based on Canton-Kowloon terms, had approached the Germans, and in a few days the combination would have been complete. Although Chang was justified in "making his escape," the Chinese Government recognized the considera- tion duc to His Majesty's Government for the loan of 1905, and regretted what had happened.
I maintained that we had strong reasons for complaint against Chang's doings. He had treated his obligations to us with scant regard, and a singular want of grati- tude, and I failed to see that the desire of the British and Chinese Corporation to secure that the loan funds should be spent honestly and not placed to the mercy of provincial bureaux, like those of Kiangsu and Chekiang, was antagonistic to Chinese interests.
The system of treating loan funds on the Tien-tsin-Pukow and Shanghae-Ningpo Railways had been tried and found wanting, and such a system could not be perpetuated without serious consequences to China's credit.
I telegraphed the purport of Liang's remarks to you on the 10th March, and informed you in my telegram No. 59 of the 12th March that I had alr, ady spoken twice to him in the sense of your telegram No. 42 of the 10th March, and that I proposed to write to him as soon as I learnt the results of the negotiations which were about to take place in London.
Your telegram No. 44 informed me that at the meeting of the groups held on the 12th March the German representatives explained that the conclusion of the preliminary agreement by Mr. Cordes was due to a misunderstanding, that it was their earnest wish to withdraw if possible from the terms agreed to, and they hoped in this to count on the support here of my French colleague and myself; and you sketched the terms of a draft Agreement which had been accepted by the three groups, except that it was made subject by the Germans to two further conditions still to be discussed.
As regards the alleged misunderstanding, Mr. Cordles' own statement to Dr. Morrison may be of interest. He said that he knew from other sourcos, Belgian and French, of the negotiations between the groups at home, but that he himself had nothing from his own people. Acting on his long-standing instructions which had not been revoked, he jumped in when Mr. Bland declined to consider the Chinese offer, and hastened to conclude an arrangement before fresh instructions reached him.
I did not write to Liang as proposed, and in my telegram No. 62 of the 16th March I had the honour to state my reasons. It seemed to me that if I addressed a written protest to the Wai-wu Pu, reminding them of the undertaking given to Mr. Bland, and if the London negotiations terminated successfully, they would have a right to consider that I was temporizing until the combination in
Europe was completed, for it may be considered as certain that the nature of the discussions between the groups is not kept a secret from the Chinese. I pointed out, on the other hand, that if I remained passive the Germans might so arrange matters as to sign a final agreement the moment the London negotiations failed, and allege another misunderstanding. I added that the German Minister had called on me twice without mentioning the subject.
On receipt of the instructions contained in your telegram No. 45 of the 15th March, I consulted with my French colleague as to what we could do to support the withdrawal of the German offer as soon as the German agent was instructed to take that step, and in my telegram No. 63 of the same day I reported to you the conclusions we had come to. We assumed that the Germans would inform us when the instructions to withdraw arrived, and would let us know the nature of their difficulties and the support they required. Until they did so we found it difficult to determine on a course of action, and we thought it would be a grave mistake to approach them first. If they really wished to withdraw there appeared to us to be no difficulty in finding reasons for doing so, but my French colleague was convinced that they had no intention of withdrawing, and our information, such as it was, indicated that the German agent was actively continuing his negotiations and was actually engaged in preparing a final agreement.
I have, &c. (Signed)
Sir,
Inclosure in No. 1.
Liang Tun-yen to Sir J. Jordan,
J. N. JORDAN.
[Received March 8, 1909.]
I HAVE just received the following letter from the Grand Secretary Chang:- "As a result of urging Mr. Bland to name his price quickly for the Hankow- Canton Railway Loan, he proceeded to promise to settle the price and the conditions at 4 or 5 o'clock on the 5th instant; and to give us an answer at the same time in the event of British capital not being available for this undertaking.
"At 11 A.M. on the 6th instant Mr. Bland came to the office and stated in person that if the loan was to be on the Tien-tsin-Pukow terms the British and Chinese Corporation would on no account undertake it. My two deputies, Kao and Tseng, asked him several times (if this was definitive), and Mr. Bland said explicitly that it had been decided to withdraw from the undertaking.
"In this important matter I have been negotiating now for some months with the British, and it cannot be said that I have not exhausted my obligations, public and private; and as they from first to last have been unwilling to narac a price, and now say plainly that they withdraw from the business, I could not take the risk of delaying the whole enterprise, and therefore had no other course to pursue than to settle the matter with another nationality.
"Accordingly at 3 P.M. on the same day I had a meeting with Mr. Cordes, of the Deutsch-Asiatische Bank, and settled that the general conditions should be on the basis of the Tien-tsin-Pukow terms, only the interest and issue price being even more favourable to us. Mr. Cordes wrote out a memorandum of agreement as proof of this arrangement.
"At 7 P.M. cr later Mr. Bland asked over the telephone to be given one more day. The deputies Kao and Tseng told him that we had already opened negotiations with the Germans, but agreed to his request for one day's delay.
"By the evening of the 7th Mr. Bland had received no reply, and I could waste time no longer. I accordingly wrote a reply to the Deutsch-Asiatische Bank agreeing
to their Memorandum.
"I shall be obliged if you will communicate to Sir John Jordan these circum- stances, whereby the conclusion of a loan for the Hankow-Canton Railway has been discussed with the Deutsch-Asiatische Bank in place of the British and Chinese Corporation on the withdrawal of the latter from the business, and explain at the same time that this result is none of my design, but as there has been so much delay, and the issue is so important, I have throughout emphasized the fact that I could not wait indefinitely: and this is what it has all come to.”
I hasten to communicate the foregoing to your Excellency, and avail, &c.