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[This Document is the Property of His Britannic Majesty's Government
204
CHINA RAILWAYS.
CONFIDENTIAL.
[41320]
No. 1.
100215
[November 9.]
2 DEC 09
SECTION 2,
Memorandum by German Government.―(Communicated by Count Metternich November 9.) (Translation.)
THE Imperial Government regret that they are not able to agree to the proposal communicated to them in the memorandum of the British Government of the 1st instant on the subject of the Chinese railway question. The proposal is based, according to paragraph 2 of the memorandum, on the following assumptions:
The British group would be making a double sacrifice-one on the Hankow- Szechuan line and one on the Canton-Hankow line-while the German group would be compensated for the sacrifice they made on the Hankow-Szechuan line by what they gained at the British expense on the Canton-Hankow line, and would thus be making no sacrifice at all.”
These assumptions are inaccurate. They entirely overlook the fact that the Ilunan section of the Hankow-Canton line was granted to the German financial This group by the preliminary agreement with China of the 7th March, 1909. section has a length of about 900 kilom. Inspired by the wish to come to an understanding with their English friends, who had been associated with them in previous loan agreements, the German financial group surrendered to the English financial group the rights which they had acquired to the Hunan section by the preliminary agreement above referred to after the latter group and the French group associated with them had undertaken to concede to the German financial group the construction of a section of the Hankow-Szechuan line of a length of 800 kilom., situated in the Province of Hupeh. In order to render possible this exchange of sections the loan of 3,000,000Z., provided for in the agreement of the 7th March, 1909, for the Hankow-Canton business, was increased with the consent of the Chinese Government, and the sections of the Hankow-Szechuan Railway, of which the construction was assigned to the German financial group in the Berlin Agreement of the 14th May, 1909, were included in the agreement to be concluded with China, which was then ready for signature.
The exchange of these two sections stands-as is not open to question-as an entirely separate transaction. If from one of these two sections, together of a length of about 1,700 kilom., a portion has subsequently to be conceded to a third person, it is only fair and right that both contracting parties should participate in the sacrifice. This is the case which has now arisen. America makes a subsequent demand for a share in the Hankow-Szechuan section which is reserved for the German financial group. If this demand is to be satisfied, the English group ought not to avoid contributing to its satisfaction. If the American claim had fallen upon the Hankow-Canton section, reserved for the English group, it would be the duty of the German group to contribute towards meeting the demand. In regard to the form of the contribution to be made the way to an understanding is open.
It is asked in the memorandum of the 1st instant that the German financial group
shall surrender to the English group 200 kilom. of the section already conceded to them and already sanctioned by China, so that the latter group may make a If this request were concession for the participation of America in a future section. acceded to the result would be that, by virtue of the agreement now to be concluded, England would have as her share about 1,100 kilom. and Germany only about 600 kilom. In face of such a distribution there could be no question of maintaining the balance between the groups.
The German financial group do not wish for any advantages over their English associates and in no wise intend to gain at the British expense on the Canton- Hankow line and thus to make no sacrifice at all." They only claim that, in the agreement now to be concluded, into which they are bringing their rights under the agreement of the 7th March, 1909, they shall either take up a position of approximate equality with the English group or be compensated by the latter.
Berlin, November 5, 1909.
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