Inclosure 1 in No. 1.
Memorandum handed to Mr. Hillier by Mr. Straight.
IT is proposed to secure an early settlement of present difficulties by an arrangement as follows:-
Arrangements now reached, as provided by the original Hu-Kuang agreement and the draft supplementary agreement, to stand, except that an American chief engineer will be appointed for the Kuangshui-Hsiangyang section of the Hupei section of the Hankow-Szechuan line, such engineer to co-operate with, and be subject to, the general direction of the German engineer, who shall be named as chief engineer for the entire Hupei section, in accordance with the terms of the original agreement.
The appointment of such an American engineer shall be recognised by China by an exchange of letters.
A private arrangement shall be made between the banks, to which China shall not be a party, in which the American group shall recognise that, in case the railway be extended to Chengtu, the chief engineer for the first section beyond Ichang, about 500 kilom., shall be French, the chief engineer for the second section, about 600 kilom., shall be American, and the chief engineer for the third section, about 500 kilom., shall be British,
October 29, 1909.
Inclosure 2 in No. 1.
Consul-General Fraser to Sir J. Jordan.
(Private.) (Extract.)
Hankow, November 1, 1909. THE Taotai, returning my call on the 30th, said the Viceroy was very much in favour of the idea of having the railway embankments built by the flooded-out people; but his Excellency was loth to move in the matter just now, because the Board of Communications had telegraphed and written to him to ascertain what actual sums the two provinces could and would put up for railway building either at once or year by year. The Hunan protest against the loan had been followed by Hupei protest, and Board and Viceroy were being bombarded with telegrams and letters full of assurances that the two provinces were able and ready to copy Chekiang and save their homes from foreign interference. A censor had memorialised in the same sense, and the Board, the Viceroy feared, was trying to shift the odium of the loan on to his shoulders. He had told Hunan governor to forward exact details of what his province could guarantee financially, and not to be content with vague promises, but to demand valid security or cash. His Excellency had also made similar demand on the Hankow Association of Commerce and reminded the promoters of last year's agitation, of their failure to take steps to take up the enormous number of shares which they subscribed at their meetings. His Excellency the Taotai know perfectly well that the provinces, especially Hupei just now, could not raise any
considerable capital, and that the device of charging 1 dollar on every tael of land tax and issuing share scrip when the extra charge reached 5 dollars was a burden the farmers could not face; and his Excellency means to make a plain-spoken report to the Board on the fictitious nature of the protests. His Excellency is, however, most averse from being made the scapegoat of the Board, and will try to avoid being saddled with the loan arrangements and the supervision of the work.
The native papers here seem firmly convinced that the foreign Powers are so cager to press loans on China that she could get any terms she chose, if only there were not the bogey of partition in the background. They are also beginning a scare of coming foreign tutelage of China in finance.
[This Document is the Property of His Britande Majesty': Go
CHINA RAILWAYS,
CONFIDENTIAL.
[42742]
(No. 398.) Sir,
No. 1.
219
09215
2 DEC 091
[November 22.]
SECTION 2.
Sir J. Jordan to Sir Edward Grey.--(Received November 22.)
Peking, October 30, 1909. NOT having received the reply mentioned at the close of my despatch No. 362 of the 5th October, I asked to see the Grand Secretary Na-t'ung specially with regard to the affairs of the Shanghae-Ningpo Railway, and at an interview at the Wai-wu Pu on the 26th October I reminded his Excellency of Prince Ching's assurance of the 20th July and of what had happened before and since, drew special attention to the memorandum you gave to the Chinese Minister on the 17th August, and pressed strongly for some definite statement of the action which the Chinese Government proposed to take.
Na-t'ung assured me that as soon as Tang Shou-chien had his audience of the Prince Regent, and this must take place in the near future, another president would be appointed to the Chekiang Railway Bureau, who would be more under the control of the Board of Communications and would act in accordance with the provisions of the loan agreement.
I expressed dissatisfaction at the further delay which had taken place, and dwelt on the importance of some immediate steps being taken, but the grand secretary insisted that the matter could not be hurried, and that Prince Ch'ing and the Board of Communications, both of whom he had consulted before our interview, were doing their utmost to remove the causes of the difficulties in the past and to provide for barmonious working in the future.
I stated that the Hong Kong and Shanghae Bank had recently paid requisitions of the director-general on the loan funds to the extent of 310,000 taels, and that it was very doubtful how far this money was being applied to the construction of the railway.
I may mention that I have repeated to Mr. Hillier my opinion that the bank is not morally justified, legal advice notwithstanding, in continuing to make these issues of loan funds to the Chinese. The bank authorities know perfectly well that the risk they incur in withholding the money is infinitesimal, but it does not suit their general interests to take such a step. That, however, is rather a reason why the bank should not undertake business in which it is not prepared to make a stand to assist the legation in resisting Chinese malversation.
I have, &c.
[2486 y-2]
J. N. JORDAN.
Sc
Jus