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Copy of telegram from Peking to London, January 10, 1910.

Advise the following to British and Chinese Corporation from E. G. Hillier :- Shanghae-Hangchow-Ningpo Railway. In order to assist director-general force submission of provincial bureaux, would you be prepared, at the request of Chinese Government, to apply for order of court to allow transfer of loan funds construct proposed new railway Kai-feng-fu-Hsu-Chou-fu, about 200 miles? Security and other terms loan agreement remaining in force and funds already withdrawn to be replaced. Foregoing telegraphed at request of director-general, who is very auxious put an end to present situation, but desires to be assured of practicability of alternative scheme in case of need.

We strongly commend to your support. Inform Foreign Office. Telegraph reply as soon as possible.

481853

[This Document is the Property of His Britannic Majesty's Government.]

CHINA RAILWAYS.

CONFIDENTIAL.

Red 18 FEB 10

[January 29.]

SECTION 1.

(2232)

(No. 55.)

No. 1.

Sir Edward Grey to Sir F. Bertie.

Sir,

Foreign Office, January 29, 1910. WITH reference to Mr. Consul Carlisle's despatch No. 2, Commercial, of the 20th May last respecting the French railway running through French Indo-China from Laokai to Yunnan-fu, copy of which was sent to you in print, I now trausmit to your Excellency the accompanying copy of a further despatch from that officer dealing with the question of discrimination on the part of the railway authorities in favour of French or Indo-French goods.*

As, however, it was not clear whether preferential rates were accorded to goods of this character on the whole of the line, or only on that part of the line which was within French territory, Mr. Carlisle was requested to report on the matter. A further despatch from him (copy enclosed)† which crossed this instruction left no doubt that the preferential rates did in fact apply to the whole line, and the informa- tion was fully confirmed by Mr. Carlisle's despatch No. 6 of the 14th October, copy of which is also enclosed, which stated that preferential rates were accorded to goods of French and Indo-French Chinese origin dispatched from Haiphong or Hanoi on the French portion of the line to Mongtze, the then terminus of the Yunnan Railway and well within Chinese territory, and that they would apply to goods dispatched to Yunnan-fu, the eventual terminus, as soon as traffic was opened to that place. Mr. Carlisle added that the rates in question were only in force until the 1st July, 1910, on which date they, as well as the system of rebates referred to in his despatch No. 1 of the 10th July, would be liable to revision.

Copies of this correspondence were sent to the Board of Trade, who were asked to furnish their views as to the existence of any grounds on which the matter could be brought to the notice of the French Government with a view to endeavouring to obtain the removal of the preferential rate.

Your Excellency will observe from the Board's reply, copy of which is enclosed,§ that, while attaching importance, as a question of principle, to the maintenance of equality of treatment for all goods, whatever their country of origin, carried on railways within the Chinese Empire, and also to the full preservation of the rights accorded to this country by article 4 of the Anglo-French declaration of 1896 relating to Szechuan and Yunnan, they doubt whether in the present case the matter is of sufficient practical importance to British trade to render formal representations to the French Government necessary. They therefore suggest that the case might be met by informing the French Government that the attention of His Majesty's Government has been called to the differentiation, and that, while they refrain from raising objection in this particular case, they trust that it will not form a precedent for similar action elsewhere, as they would regard any such differentiation against British trade as inconsistent with the general principle of equality of treatment affirmed in article 4 of the agreement referred to above.

I should be glad if your Excellency would, when a suitable opportunity arises, make an unofficial communication to the French Government in this sense.

I enclose for your Excellency's information a short memorandum which has been drawn up in this department dealing with the earlier phases of the question at Peking.

I am, &c.

E. GREY.

* Consul Carlisle, No. 1, Confidential, July 10, 1909.

Consul Carlisle, No. 3, October 2, 1909.

§ Board of Trade, January 19, 1910.

Consul Carlisle, No. 6, October 14, 1909.

Memoranduma.

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