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Enclosure 9 in No. 1.

Taotai to Consul-General Sir P. Warren.

March 25, 1910.

I HAVE the honour to acknowledge the receipt of your letter of the 24th instant, respecting the interference of the Chapei police with the laying of gas in a Chinese house on the North Szechuan Road, in which you stated that you were prepared to obtain police protection for the company's employés if they were interfered with when they resumed work on the third day.

Although the promoted Taotai Yüan agreed to a temporary arrangement in regard to the laying on of gas to the north of the settlement by the British company, yet since that territory was formed into a Chinese municipality and policed, all matters concerning the traffic of that area and the affairs of its residents fall to the Thus, in the 4th month of police to find money for and attend to in due course. Kuanghsü 32 (April-May 1906), when the senior consul applied to put up gas lamps in the North Honan Road, the promoted Taotai Jui refused the application on the ground that circumstances had altered, and that a casual arrangement could not be regarded as an established precedent.

However, in view of what is said in your letter, I think it best after all to consult the general police bureau as to the possibility of a compromise, and will address you further on receipt of their reply. Pending a settlement, the work should on no account be continued, and still less should police be sent and a disturbance created. Knowing as I do the sincerity of your friendly feelings, I do not doubt that we shall be able to agree.

Enclosure 10 in No. 1.

Taotai to Consul-General Sir P. Warren.

March 28, 1910.

WITH reference to your letter of the 24th instant respecting the gas company's operations in the Szechuan Road, I am now in receipt of a report from the police bureau to the following effect.

A man named Yuan, living in the Sên K'ang Street, intended to connect with the gas system of the settlement, and the police prevented this on the ground that the place was within the Chinese municipality. There was no question of laying gas

in a Chinese house in the North Szechuan Road. There appears to be an inconsistency in the consul-general's letter, which first names the Kaifeng Road as the locality and afterwards the North Szechuan Road. Since the establishment of the Chapoi police, whenever the gas and water companies have had occasion to repair those of their pipes already laid outside the boundary of the settlement, permission to do so has always been conceded on application. But the laying of new pipes must be stopped, as there is no telling how far it might go. Besides the water supply and electric light of the Chinese municipality itself will be ready shortly, and it does not seem reasonable to allow further encroachments within its sphere of operations.

I have the honour to observe that now that the Chinese municipality of Chapei is arranging for its own water and gas supply, the position is widely different from what it was before the police bureau was established. The temporary permission given by the promoted Taotai Yuan to lay pipes in North Honan Road was only for the convenience of the locality, and not to confer special rights upon the gas company. What is said in your letter about obstruction to the business of British companies is not justified. Moreover, the police bureau has gone as far as can be justly expected in allowing the gas and water companies to repair their pipes where they are already laid. It is not desirable that they should extend their operations beyond settlement limits in places where this has not already been done.

I shall be obliged if you will instruct the companies accordingly.

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Enclosure 11 in No. 1.

Consul-General Sir P. Warren to Tsai Ta-jên.

Sir,

Shanghae, April 4, 1910. I HAVE received your letter of the 28th instant in which you state that it is not desirable that the gas and water companies should extend their operations beyond settlement limits in places where this has not already been done, on the ground that the Chinese municipality of Chapei is arranging for its own gas and water supply.

You also state that the position is widely different from what it was before the Police Bureau was established.

I regret that I am entirely unable to agree with your views on this subject. At the time that the Chapei municipality was established in 1906, His Majesty's Government through His Majesty's Minister in Peking made repeated and emphatic protests to the Chinese Government against such establishment on the ground that British subjects already possessed large interests in the area proposed for the municipality, and that the object of the municipality was simply to put a stop to the growth of the treaty port of Shanghae. His Majesty's Minister also expressly stated that His Majesty's Government could not acquiesce in any action of the Chinese authorities which must do injury to the British interests involved.

The business of the gas and water companies was already firmly established in Chapei before the establishment of the municipality. Their pipes were laid in the foreign-owned property outside the settlement boundary, and also in the Chinese-owned roads, under permission first granted to the water company in 1904 and to the gas company in 1805 by Taotai Yüan.

The inhabitants of the Chapei district, both foreign and native, appreciating the advantage conferred by the two companies, have become consumers in ever-increasing numbers, so that the companies' pipes now cover many miles and their consumers number several hundreds.

Suddenly, without any previous communication from yourself, as the Chinese official charged with the conduct of international business of this port, to me, the Chapei police have commenced to obstruct the two companies in their perfectly legitimate business of supplying gas and water to foreign and Chinese consumers beyond settlement limits, Chinese consumers have been threatened with penalties if they use the companies' gas and water, the companies' employés have been molested and imprisoned for carrying out the orders of their British employers, and permits have been refused to the companies to lay their pipes.

Such action constitutes a most serious and unfriendly interference with the rights of British subjects, and is such as His Majesty's Minister has already warned the Chinese Government will not be tolerated by His Majesty's Government.

I am prepared to admit that the companies should apply for official permits to execute any works which requires a temporary interference with Chinese public-owned roads or property, but for work on private-owned property the permission of the owner alone is required.

I enclose two plans showing the existing mains owned by the gas and water companies respectively in the Chapei district.*

It is feared that, when the proposed Chinese water and gas companies commence operations, there will be confusion between these and the English companies. I am prepared to discuss with you an equitable arrangement to meet such a case, and if you are prepared to undertake that there will be no interference with the supply of gas and water by means of branch pipes to consumers situated within 200 yards of any of the existing gas and water-mains, I shall for my part be prepared to direct the companies not to lay any new mains in Chinese-owned property until an arrangement has been come to.

If you are unable to agree to this proposal, I must take such steps as may be necessary to protect the British companies in the carrying on of their business against interference by the Chapei police.

I have, &c.

PELHAM L. WARREN.

* Not reproduced.

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