[This Document is the Property of His Britannic Majesty's Government.]
CHINA RAILWAYS.
>
CONFIDENTIAL.
[30105]
No. 1.
357
[August 10.]
SECTION 1.
Mr. C. S. Addis to Foreign Office.--(Received August 10,)
Dear Mr. Langley,
31, Lombard Street, London, August 9, 1909. I ENCLOSE copy of Hillier's letter just received from Peking giving an interesting account of the effect produced by the Taft telegram.
I am sending copies to our French and German friends-after eliminating the reference to governmental action on the last page.
Yours truly,
Inclosure in No. 1.
C. S. ADDIS.
My dear Addis,
Mr. Hillier to Mr. Addis.
Peking, July 23, 1909. I HAVE your letter of the 2nd instant. Hukuang Railway loan. The situation is summarised in my telegram to you yesterday, copy of which is enclosed. The extraordinary step taken by President Taft in telegraphing direct to the Prince Regent has completely paralysed the Chinese, and they rightly ask where is this precedent to end, ignoring, as it does, all the conventions of diplomatic intercourse. On receipt of the message, the Regent summoned the Wai-wu Pu to audience; all were present, including Prince Ching, and the Regent communicated to them the President's message, and instructed them to devise some means of satisfying the American wishes. In the meantime, at the suggestion of Sir J. Jordan, I went to see Fletcher, and ascertain by a friendly discussion of our differences if there was any prospect of arriving at a solution. His idea was that a solution might be found by increasing the amount of the loan, in order to mitigate the financial sacrifice which our banks might otherwise be called upon to make, and he suggested an increase of 625,0001, doubling the participation offered by us at the London conference. I asked whether, in that case, his idea was that the Americans should have a participation of 121. lacs, leaving 1641, lacs for each of the other groups. He said no, his instructions were positive that participation in the entire loan must be equal. I pointed out that the proposal to increase the amount of the loan was in any case complicated by the request for participation just made by Russia. On the 17th instant the Russian Minister, M. Korostovetz, wrote to the Wai-wu Pu, under instructions from St. Petersburgh, saying that, as he understood that there was to be a rearrangement of the loan contract, and as Russia had important trade interests in Hankow they would be glad to participate. At the same time he sent a representative of the Russo-Chinese Bank to me, and to my French and German colleagues to inform us that, while Russia had no intention to press for participation in the loan agreement as it stood, if there was going to be any rearrangement she would be glad to come in for a small share, not exceeding 5 per cent. My reply to the Russian was that no rearrangement or alteration of the initialed agreement was contemplated, but I pointed out now to Fletcher the danger there might be in altering the amount of the loan in order to admit American participation we should not only have the Russians down on us, but the Japanese, followed probably by the Belgians and Austrians, in fact the thing would be reduced to an absurdity.
Fletcher then told me, what put a different complexion on his proposals, that the Americans did not ask to be signatories to the agreement. If we would give him a simple document guaranteeing the American banks a participation of 25 per cent. in the loan, he would immediately withdraw his protest, and allow ratification and signature to be proceeded with by the Anglo-French and German banks. As regards increasing the amount of the loan, that would remain a matter entirely between the
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