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[This Document is the Property of His Britannic Majesty's Government.]
27198
[B]
CHINA RAILWAYS.
CONFIDENTIAL
[26165]
No. 1.
[July 12]
SECTION 14 AUG 09
Sir J. Jordan to Sir Edward Grey.-(Received July 12.)
(No. 227.) Šir,
Peking, June 23, 1909. IN your despatch No. 143 of the 12th May you informed me that you had pointed out to Mr. Addis that, while the groups which he represented would continue to receive the exclusive support of His Majesty's Government in connection with the Canton-Hankow and Hankow-Szechuan lines of railway, you could not accord this support for all time to one particular firm for any railway business that might arise in China in the future.
You suggested that the difficulty of affording support to a particular group would be in a great measure removed if it were possible for the principal firms of financiers and contractors of good standing interested in the Far East to amalgamate, and you invited an expression of my views in regard to this suggestion.
My experience here has convinced me that His Majesty's Government could not continue to afford exclusive support to any corporation or group of firms in railway business in China without incurring serious and, in my opinion, justifiable criticism. The agents of Messrs. Samuel and Co. and Messrs. Paulings have repeatedly in the course of the recent negotiations protested vehemently against being excluded from competing with the British and Chinese corporation and the Chinese Central Railways, and have not hesitated to state publicly and to make it known in the press that the British Legation was being used to further the interests of a particular set of British subjects to the exclusion of all others. Such a state of things is manifestly untenable, as it places the legation in an invidious position and creates a feeling of soreness both amongst the Chinese, who think that they are being "cornered" by our official action, and amongst those of our own people, who find themselves excluded from a lucrative field of employment. A corporation or group of financiers who can count upon such exclusive support are naturally inclined to take up a strong attitude in their dealings with the Chinese and to trust to His Majesty's Government rather than to patient methods of negotiation for the attainment of success. Should they fail to compete successfully with their foreign rivals, we are debarred from transferring our support to other British firms, however high their standing may be, and the result is the sacrifice of political interests of considerable magnitude and importance.
So far as the difficulties with our own people are concerned, they would doubtless be largely removed if it were possible, as you suggest, to make a combination which would include all the leading financiers and contractors interested in Far Eastern business. But I understand that the formation of a British group which would be as representative of British finance as the French and German groups are of finance in their respective countries is considered impracticable, and that the relations between the financiers and the manufacturers are not so well organised in Great Britain or so adapt- able to the end in view as they are on the Continent, especially in Germany. The German banks which constitute the consortium of which Herr Cordes is the agent in China, have each, I believe their clientèle of manufacturers to whom they allot a fixed portion of their orders for materials. They have likewise an institution which corresponds to the British and Chinese Corporation in the British system, but it is subordinated to the banks, and the dual method of representation which obtains here and to which so many of our difficulties appear to be traceable, finds no favour with the Germans. The first essential in any enterprise of this kind is that there should be cordial co-operation and identity of interest amongst the groups forming the combination and this unity has hitherto been conspicuously absent on the British side. The relations between the Hong Kong and Shanghae Bank and the British and Chinese Corporation have often been those of rival institutions, rather than of companies closely allied and aiming at a common end. Messrs. Pauling and Co., who for a time seem to have come to terms with the British and Chinese Corporation, felt aggrieved that they were not allowed to supplant the latter when the negotiations with Chang Chih-tung were broken off, and Messrs. Samuel and Co. and other firms considered that they were unjustly treated in not being afforded active support in underbidding the Germans and ousting them from the position they had secured in the Canton-Hankow line.
[2330 m-4]