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When we just were occupied with the affair we receive on the 16th March a note from the honourable dean urging reply.
We find that the Shanghae settlement is a place which had already been extended in former times. Originally it was very large, and under such circumstances it is difficult to extend it again. As to the present discussions of the Shanghae consular body regarding the extension of the northern boundary of the settlement, the Ministers of all countries also should know that it is difficult to carry out this matter. Police and sanitation belong to the internal affairs of China, the local authorities are already reforming step by step, and the conditions (circumstances) are of course not the same as in former times. Though the said territory is adjacent to the settlement, certainly the public order can be protected (guaranteed) and danger avoided. We think it necessary to communicate this to your Excellency the dean as a reply that you may take note of, and inform their Excellencies the Ministers of all countries for the purpose that they may give orders for the guidance (of the consuls).
A necessary communication.
Communicated as above.
(No. 31.) Sir,
Enclosure 3 in No. 1.
Consul-General Sir P. Warren to Mr. Max Müller.
Shanghae, April 5, 1910. IN my despatch No. 89 on the subject of settlement extension of the 16th December, 1909, I had the honour to report that the only result produced by the representations of the consular body to the local Chinese authorities was the issue of renewed instructions by the Viceroy at Nanking to the taotai here to have the matters of sanitation and police in the Chapei district properly arranged.
I stated at the conclusion of my report that I proposed to address you further on the effect likely to be produced on the relations between the foreign and Chinese authorities at this port by any indefinite postponement of the question of settlement
extension.
I now have the honour to report that within the last two weeks the attempt of the taotai to comply with the Viceroy's instructions has led to serious interference with British interests as represented by the gas and water companies in the Poashan district, and has thus at the same time supplied concrete evidence of the effect on international relations of the postponement of the demand for settlement extension.
The Shanghae Waterworks Company (Limited), and the Shanghae Gas Company (Limited), are British companies of old standing at this port, controlled by entirely British boards of directors. Their capitals stand at 327,0001. and 1,200,000 taels respectively, and their stocks rank among the local gilt-edged securities.
For many years past both companies have extended their operations beyond settlement limits without opposition from the Chinese authorities wherever municipal roads have been built, or Chinese or foreign-property owners have requested their services.
In the district to the north of the settlement boundary, the only Chinese-owned road up to 1906 was the North Honan road extension, and the two companies having already laid their mains in the municipal-owned North Szechuen road extension in the same district, applied through this consulate for permission from the Chinese authorities to lay their mains in the North Honan road extension.
The water company's application made on the 19th September, 1904, was granted by the taotai on 7th November, 1904, and the gas company's application made on the 13th March, 1995, was granted on the 19th May, 1905, in the terms set forth in the correspondence, copies and translations of which are enclosed.
As the foreign and Chinese population of this northern suburb of the settlement increased, the two companies increased their connections accordingly, until at the present day their mains and service pipes from a network covering many miles as shown in the two plans which accompany this despatch.*
When, therefore, in 1906 the Chinese authorities with the avowed object of blocking any further extension of the settlement, and in the face of the protests of His Majesty's Minister, established the so-called Chapei municipality in this district, both
* Not reproduced.
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the companies had large vested interests in the area affected; not only were these legitimate interests firmly based on the grounds of Chinese official sanction and of public utility, but in the case of the water company the proclamation issued by the faotai in July 1906 in settlement of the levy of rates dispute, expressly recognises the (right of residents to make use of the company's service, provided permits were applied for to the newly established police bureau. (See Municipal Council Report for 1906, at p. 409.)
For over three years from the date of this proclamation the only permits required by the Chinese police were permits to open Chinese-owned roads under their control and these were regularly applied for by the water company and issued.
No permits were required for work to be done on private-owned property, and in the case of the gas company no permits appeared to have been insisted on until recently for work either on public roads or private property.
Early in 1909, however, the gas company began to suffer annoyance at the hands of the Chinese police, and their employés were interfered with on several occasions while laying new services, and on one occasion a fitter was arrested but was released the next day on the company's application.
The company, anxious to work in harmony with the Chinese authorities if possible, did not report these occurrences to me, with the result that they increased.
In January of this year the company's engineer came to the consulate and reported what was going on; he was advised to write a detailed statement of what had occurred, and was told that the matter would be taken up at once. Nothing more was heard, however, till the 16th ultimo, when it transpired that the company had been approached in the meantime by the Chinese police, who stated that the trouble was solely due to the company's failure to apply for permits, if this were done there would be no difficulty in the future.
Acting on this assurance the company postponed appealing to the consulate only to find that the first permit applied for was refused point blank on the ground that the site of the work was outside settlement limits--although within 6 feet of an existing pipc.
The Chinese police now emboldened had begun to threaten consumers and had even sent plain clothes constables on to the North Szechuan road extension, a municipal thoroughfare, for the purpose of intimidating shopkeepers on that road who had applied to the company for services.
llaving instructed Mr. Vice-Consul Barton to visit the localities in question and verify the complaints by personal enquiries addressed to the residents, I wrote to the taotai on the 24th ultimo complaining of the action of the Chinese police aud requesting him to give the necessary instructions within two days to prevent any further interference with the company's legitimate business.
Up to this date only one case of interference with the water company had been reported to me, namely, on the 8th December, 1909, when the Chinese police arrested two fitters employed by the company who were engaged in repairing a water service supplied to a Chinese resident a few yards beyond the settlement boundary off the North Chekiang Road. My verbal representations to the taotai secured the immediate release of the fitters, and the taotai also expressed his assent to my view that if the Chinese police proposed to introduce new permit regulations, the proper course was for him to communicate with me in the matter, and not for the police to arrest the employés of British companies while engaged in carrying out the legitimate business
of their masters.
On the 25th ultimo, the water company reported to me that the Chinese police were delaying the issue of two permits applied for by the company to lay services connecting with the mains in the North Honan road extension and Woosung roads respectively.
As it appeared evident from this that the Chinese police had determined on systematic interference with the operations of both companies, I instructed Mr. Vice- Consul Barton to call on the taotai on the 26th ultimo and convey in my name a warning against such procedure.
The taotai had in the meantime replied on the 25th ultimo (copy of translation enclosed) to my letter of the preceding day, holding out the hope of compromise, and at the interview on the 26th ultimo he adopted a friendly attitude, and said he would depute two of his secretaries to see Taotai Wang of the police, and would let me have a reply on the 29th ultimo. I agreed that no work should be done by the companies until this reply was received.
On the 28th ultimo I received with some surprise the taotai's uncompromising
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