[This Document is the Property of His Britannic Majesty's Government.]
9850
467
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Such being the state of the case when the American demand was imposed on us, the situation and solution are correctly set out in the paragraph of your letter beginning, "La situation était bien simple," &c., viz., that each such give up 200 kilom., so as to make room for the American group on equal terms. That ) is the solution we have always advocated, and, when it was found that the Germans could not be induced to give up more than a sub-engineer on 200 kilom., we advocated the next best solution, viz., that the Americans should take the 200 kilom. with a sub-engineer, plus 400 of the deferred, making 600 in all, thus leaving 600 kilom. each of the deferred for the French and British engineers. We even went further, and informed the American group that if they considered they were not being fairly treated in this division, we would take their share and give them 600 kilom. in the deferred portion.
In view of this conciliatory attitude, we were somewhat surprised to learn that it is considered in Paris that the English group alone has shown itself “
"intransigeant." Speaking for that portion of the English group which is concerned with the Central Railways, I submit we have been most conciliatory. We even expressed our willingness to accept the first American proposition and take 500 kilom, but, in loyalty to our French co-partners, we made it conditional on their also agreeing to 500, and, when they refused, we withdrew our conditional acceptance. We only ask them to be equally loyal to us, and not to press us to take a worse position than they are willing to take themselves. So long as the Chinese Central Railways exists there must be entire equality of treatment as between the two component groups, and, as we have already pointed out to our French friends, any attempt on the part of one group or the other to obtain specific advantages for itself must make co-operation impossible and bring about the dissolution of the society.
For that reason we regret that there seems to be a disposition in Paris to fall in with the latest American proposal, which was to surrender 100 kilom., not to the Central Railways, but to the French group. We hoped that the French group would adopt the same attitude as we did on the former occasion, and say that they could not disassociate themselves from their English co-partners, and that therefore their assent must be conditional on the English assent. If their assent is given unconditionally it places the English group of the Central Railways in the invidious position of either having a smaller share in the Szechuan line than any other nationality, or of being the only party that stands in the way of a settlement.
If the French group desire to negotiate on an independent footing and get what advantages they can, we should offer no objection, provided we too regain our inde- pendence. But they cannot have it both ways. They cannot take the share that falls to them equally with us as co-partners in the Central Railways, and then proceed to negotiate with our rivals for an extra advantage for themselves. This would be totally at variance with the spirit and letter of the fundamental agreements on which the Central Railways was based.
Under the circumstances we think the time has come to consider calmly whether the Chinese Central Railways has not outlived its usefulness, and whether it would not be better all round that it should be dissolved and voluntarily liquidated.
There would then be only one English group instead of two as at present, a fact which hampers negotiations and tends to confusion of ideas. The two English groups are not identical nor controlled by the same individuals, and the acts of one may be erroneously attributed to the other. This would be obviated if the Central Railways were out of the way, and the term "Le groupe anglais" would have a precise and definite meaning, which at present it has not.
On the other band, the French group, which would naturally include all the continental shareholders in the Chinese Central Railways, would certainly be in no worse a position, and I think in a better position than they now are in. The agree- ments of May and July 1909 secure for the French group an equal one-third interest both in the Hukuang loans and in all future loans, and the only difference would be that the group would retain all profits on flotation commission, &c., for its own use, instead of, as at present, handing over such profits to the Chinese Central Railways and receiving back a proportion by way of dividend. The situation would be simpler, and I think, even from the pecuniary point of view, more advantageous.
We should be glad if you would place these views before your Paris friends for
their consideration.
«
CHINA RAILWAYS,
CONFIDENTIAL.
[6867]
(Confidential.)
Your Excellency,
No. 1.
Sir Edward Grey to Count Benckendorff.
Race Rise 4 APR 10] [March 4.]
SECTION 2.
Foreign Office, March 4, 1910. I HAVE to thank your Excellency for communicating to me confidentially on the 24th ultimo the summary of a telegram on the subject of the Chinchow-Aigun Railway, and of the alternative proposal for a railway from Kalgan to Kiakhta which the Russian Government are about to make to the Chinese Government and to the Anglo-American syndicate.
I shall be glad to learn in due course the reception that the proposal meets with.
I have, &c.
E. GREY.
[2667 d-2]
0
Believe me, &c.
C. S. ADDIS.
1