[This Document is the Property of His Britannic Majesty's Government.]
CHINA RAILWAYS.
CONFIDENTIAL.
00
[17716]
(No. 127.) Sir,
No. 1.
238
о
[May 18.] 19141
SECTION C
Rrst 23 JUN 10
Mr. Max Müller to Sir Edward Grey.-(Received May 18.)
Peking, April 28, 1910.
I HAVE the honour to enclose for your information copy of a letter addressed by Mr. Mayers, the Peking agent of the British and Chinese Corporation, to the board of directors in London, describing the present position of affairs in regard to the Shanghae-Ningpo Railway and the result of the conversations which he has had with Liang Shih Yi, director-general of railways, since his arrival in Peking.
I had delayed some time in replying to your telegram No. 40 of the 8th March, in which you requested my views as to the expediency of taking any further action in regard to the proposed exchange of the Shanghae-Ningpo Railway loan agreement for a similar agreement for a line from Kaifengfu to Hsüchowfu, as I was anxious that Mr. Mayers, who was shortly expected to arrive in Peking, should first have an opportunity of discussing the question with Liang Shih Yi, who seemed to have lost all interest in his proposal. I subsequently telegraphed that it appeared to me that as the Board of Communications were not pressing for an answer, it would be best, in view of the adverse opinion of counsel, to say nothing further about the matter for the present, as a direct refusal to entertain the proposal would weaken our position in regard to any future representations we might wish to make respecting the Shanghae-Ningpo Railway, as the Chinese Government would be in the position to say that they had offered us a most favourable alternative and we had rejected it.
It is difficult to judge with any degree of certainty whether the anticipations of the Board of Communications as to the recovery of the line from the Kiangsu and Chekiang Railway Companies are at present justified. As far as the actual state of affairs on the Shanghae-Ningpo Railway is concerned I regret to be unable to report any improvement, the Government being still unable to carry out the terms of the loan agreement. We have only Liang Shih Yi's word to go upon as to the effect of the counsels of the vice-president, Shen Yun Pei, on his fellow provincials of Kiangsu, and certainly the most favourable indication is the practical bankruptcy of the two provincial companies. It is admitted that the completed sections of the Shanghae- Haukow line are being operated at a heavy loss, and on the 7th April I received a private letter from Sir Pelham Warren as follows :--
"I learn that the Chekiang Railway Company are now practically at the end of their resources. It is said that they have not sufficient funds in hand to pay their staff at the end of this (second) Chinese moon, or to pay the current quarter's interest on their share capital. The company's agents have recently been endeavouring to raise money in Shangbae on mortgages, without success.'
Under these circumstances, and in view of the assurance that no more loan funds would be drawn until the situation was cleared up, I am inclined to endorse Mr. Mayer's advice to the corporation to exercise still further patience. They have little to lose by this, and if by any chance the Board of Communications is successful in recovering control of the line we shall have escaped the appearance of a humiliating defeat, have strengthened the hands of the central Government in dealing with provincial opposition, and avoided the establishment of a dangerous precedent.
At an interview at the Wai-wu Pu on the 20th instant I reminded his Excellency Liang Tan Yen that Sir John Jordan's note of the 21st December* still remained unanswered, and that this led me to believe that nothing had been done towards remedying the state of affairs of which Sir John had complained or towards carrying out the promise of the Wai-wu Pu and the Board of Communications that the provisions of the loan agreement would be strictly complied with. I told his
A request that the promise given by the Wai-wu Pu that the provisions of the loan agreement would henceforth be strictly complied with would be fulfilled in letter and spirit with as little delay as possible.- R. II. G.
[2761 s- -2]
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