t
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department that all the recent negotiations have been conducted. Before going to this interview Lord ffrench informed me that the Chinese had recently shown great suspicion of his firm being associated with the Japanese in this undertaking, and asked me if an opportunity offered to give a contradiction to the rumours which had been published in the vernacular press.
The interview had not proceeded far before his Excellency Hsü, referring to the railway question, inquired as to the standing and business connections of Messrs. Pauling and Co. I told him that the firm held a leading position in the railway world, and assured him that it was a bona fide British concern which had made no arrangements with regard to this line either with Japanese or other foreign firms. If China, however, for reasons which I could easily understand, thought it desirable to give the Japanese a business participation in the construction of the line, I felt sure that Messrs. Pauling and Co. would be glad to fall in with any terms which might be proposed.
Hsü Ta-jen expressed undisguised satisfaction at learning that Pauling and Co. were not committed to the Japanese, and said that, having received this authoritative statement from me, he would dismiss from his mind the rumours which had been troubling bis judgment. He gave it to be clearly understood that his main solicitude was to exclude Japanese participation in any form, and the impression I gathered was that any further overtures on the subject would, in the present temperament of the Chinese, only do harm to Messrs. Pauling and Co. without in any way advancing the object desired by the Japanese Government. Mr. Ljain, to whom I have reported the result of my interview, still hopes that more friendly sentiments may prevail on the conclusion of the Manchurian negotiations, but the indications at present are, I regret to say, not favourable in any quarter.
The views of Hsu Shih-ch'ang appear to be fully shared by the Viceroy of Manchuria. On the 19th August last the latter sent a delegate to the British, American, and German consuls at Mukden to consult them regarding the prospect of procuring capital from their respective countries for the construction of this and other railways in Manchuria and the development of its mineral resources. The object, as Mr. Willis points out in his despatch, copy of which is enclosed, is evidently to create a sort of international counterpoise to Japanese enterprise in Manchuria.
Although it has been morally certain for some time past that America would acquire, if she had not already acquired, an interest in the Chinchow-Taonanfu project, it was only on the arrival of Mr. Straight that the fact was ascertained beyond a doubt. Mr. Straight has informed Lord ffrench that he holds an agreement for the financing of the line, which was signed about the same time as the agreement for its survey and ultimate construction concluded with Pauling and Co. in September 1908. The Japanese Government are, therefore, already confronted with a combina- tion of British and American interests to which those of Germany or France may form a possible addition if it suits the United States group to give either of these Powers a share in the financing of the line.
3
possibility of extension to Tsi Tsi-har or some other point on the Chinese Easteru Railway, the other from Mukden to Yen-chi-ting or some other town in the Chientao district.
The first line would open up a large tract of fertile agricultural land, whilst the second would run through a country rich in minerals of every kind, the extraction of which a railway would render economically possible.
It was out of the question that China herself should provide the capital necessary for enterprises on so large a scale, but if British, American, or German capitalists would come forward his Excellency would be prepared to grant very liberal conditions.
The Central Government, Mr. Teng went on to say, realised that the conditions in Manchuria were different to elsewhere in China, and the Viceroy thought that if he personally recommended the grant of mining concessions under terms more favourable than those laid down in the General Mining Regulations, or the raising of a railway loan under exceptional conditions, no objection would be raised in Peking. Chinese public opinion in Manchuria was practically non-existent, and there was no chance of any outbreak of popular feeling against concessions to foreigners.
From the general tone of the acting commissioner in recent conversations with me, it seems evident that Japan's action in the Antung-Mukden Railway question bas roused his Excellency Hsi Liang's bitter resentment, and he has now come to the conclusion that it is only by increasing the stake that Powers like America, Germany, and Great Britain hold in Manchuria that China can have any chance of withstanding Japan's gradual but sure advance. To attain this end his Excellency is prepared to make considerable sacrifices.
Mr. Teng informed me that he had been instructed to place similar views before my American and German colleagues.
I had the honour to telegraph the gist of this despatch to you yesterday evening.
I have, &c.
ROBERT WILLIS.
796
Inclosure in No. 1.
I have, &c.
J. N. JORDAN.
(No. 36.) Sir,
Acting Consul-General Willis to Sir J. Jordan.
Mukden, August 20, 1909. MR. TENG, the acting commissioner of the Fengtien Board of Foreign Affairs, called on me yesterday afternoon and informed me that he had been instructed by his Excellency Hsi Liang to consult with me confidentially as to the possibility of procuring British capital for the construction of railways and the development of the mineral resources of the three eastern provinces.
His Excellency's policy. Mr. Teng stated, was to maintain as far as possible the principle of equal rights and opportunities for the subjects of all nations in the three eastern provinces, but that at present, his Excellency thought, the possibility of the development of the agricultural and mineral resources of the country was dependent almost entirely on the attitude of the South Manchurian Railway in the south and the Chinese Eastern Railway in the north.
There were two lines of railway, the construction of which his Excellency would like to see undertaken as soon as possible, from Chin Chou to Taonan-fu, with the