7
[This Document is the Property of His Britannic Majesty's Government.]
-CHINA RAILWAYS.
CONFIDENTIAL.
[19052]
No. 1.
457
[May 21.]
SECTION 1.
Count de Salis to Sir Edward Grey,-(Received May 21.)
(No. 180.) Sir,
Berlin, May 19, 1909. I HAVE the honour to report that the "Kölnische Zeitung," in its morning edition of the 17th instant, gives a prominent place to an article from a Shanghae correspondent, entitled "English Railway Policy in China." The object of the writer is to refute the statements made in the "Times" of the 9th March by its Peking correspondent, with regard to the mismanagement of the work of construction on the Shanghae-Hangchow-Ningpo Railway. The article begins by observing that the fact that the unfavourable report is published at a moment when Germany is on the point of concluding a railway loan with China makes the object aimed at perfectly clear, namely, to discredit Chinese railway loans in the eyes of German investors. The only objection to this is, according to the "Kölnische," that the technical details furnished by Dr. Morrison with regard to the railway are absolutely false. The correspondent writes that, in view of the great importance of the question to German capitalists, he decided himself to inspect the railway, accompanied by an "impartial German engineer" and by one of the Chinese engineers attached to the line. The result of this tour of inspection is to have reassured the Shanghae correspondent of the "Kölnische" that Dr. Morrison was completely at fault in every one of his assertions. According to the account now given, the Chinese have constructed a railway capable of bearing the inspection of the most critical of European experts. Rails, rolling-stock, station buildings, and bridges are all of the best material, and leave nothing to be desired. The correspondent furnishes exhaustive technical details in support of his view, though it should be remarked that he somewhat qualifies his statement by pointing out that after all the chief object of the Chinese was to build at a moderate cost a railway which shall meet the requirements of the next ten years. The article then proceeds to review the history of the Shanghae-Hangchow line. The loan made by the British and Chinese Corporation was accepted against the wishes of the Chinese Companies, which were in possession of ample funds, and had begun the construction of the railway some time before. So far, moreover, the Chinese Companies had abstained from making any use of the British advance. Everything had been done before the arrival of the British Chief Engineer. The Chinese engineers, who without exception had been pupils at the German railway school at Tien-tsio, had already purchased all the necessary building material and rolling-stock in the open market. There is a great divergence of opinion between British and Chinese as regards cost of construction of Chinese railways. The British and Chinese Corporation, had taken the view that only the very best material must be used in China, whereas what the Chinese really wanted was that as many railways as possible should be built with the available money. An idea had now gained ground in China that the British wished to build the railways in the most expensive manner possible, so as to render it difficult for the Chinese ever to acquire possession of them. This fact gave the clue to the reason why China was ready to give preference to Germany in the construction of the northern section of the Canton-Hankow line.
The final conclusion drawn by the correspondent of the "Kölnische" is to the effect that foreign capital invested in Chinese railways is not in reality exposed to the risks represented by Dr. Morrison, and that, in the opinion of all experts, the guarantees offered by the Chinese in the case of railway loans are quite sufficient to satisfy the foreign investor.
I have, &c. (Signed) J. DE SALIS.
[2264 -1]