[This Document is the Property of His Britannic Majesty's Government.]
CHINA RAILWAYS.
CONFIDENTIAL.
C O 35951
Rece
[October 27.]
SECTION 1.
Rrot 24 NOV 10
[39128]
No. 1.
į
(No. 357.) Sir,
Mr. Mox Müller to Sir Edward Grey.-(Received October 27.)
Peking, October 7, 1910. WITH reference to my telegram No. 168 of to-day, I have the honour to transmit to you herewith certain notes, furnished to me by Mr. Hillier, of the interview held between the representatives of the four financial groups and Shen Yün-pei, acting- president, and Shông Kung-pao, vice-president of the Board of Communications, on the 3rd instant, in regard to the Hukuang railway loan. This interview was the result of the identic note to Prince Ch'ing, of the 19th ultimo, and I understand that the enclosed notes were drawn up by the four representatives of the banks, and communicated to the heads of missions concerned. The arguments put forward by the presidents of the Board of Communications may be summarised as follows:..
1. The agreement initialled on the 6th June, 1909, cannot be considered as final, because it was initialled subject to approval by the Board of Finance, and to sanction by the Throne. It must therefore be considered in the light of a draft agreement, open to re-discussion and modification of its terms.
2. The state of popular feeling in Hunan and Hupei is such that the agreement cannot be concluded in its present form without the risk of serious local trouble and the creation of a situation similar to that of the Shanghai-Ningpo Railway, which will be as prejudicial to the interests of the Chinese Government as to those of the financial groups. Modifications therefore are necessary to allay the popular objections, and if these can be arranged in such a form as to make further objections clearly unreasonable, the Board is then prepared to assert its authority and carry out the agreement.
The presidents did not state explicitly what modifications they had in view, and the representatives of the banks, mindful of the fact that their authority to discuss was strictly limited to the lines laid down in the identic note of the 13th July, did not think it desirable to enquire.
;
In reading through the notes of the interview, I was struck by the remark "that the text could not be considered final, since it admittedly had to await ratification both by the Board of Finance and by the Throne, as was shown by a note added to the Chinese text at the time of initialling." This note had never been communicated to this legation, and I accordingly caused the test forwarded to me by Mr. Hillier to be translated. The translation, copy of which I have the honour to enclose, shows that the presidents of the Yuchuanpu have some justification for their contention that the I called Mr. Hillier's text of the initialled agreement is subject to modification. attention to the terms of the note, and expressed astonishment that it had never been communicated to His Majesty's Legation before. Mr. Hillier confessed that he himself had been ignorant of its terms, but agreed with me that it was a strong weapon in the hands of the Chinese, and furnished them with a good argument in favour of revision of the initialled agreement. He maintained, however, that in June of last year this note was regarded as a mere formality of no importance, and that Chang Chih-tung had never meant to avail himself of the proviso therein contained, and, in fact, never did so during the long negotiations that took place up to the very day of his death. Mr. Hillier argued, therefore, that we could not permit the Yuchuanpu to hring forward this note, at this late hour, as a ground for questioning the validity of the initialled agreement. I am, on the whole, inclined to support Mr. Hillier's line of argument, but none the less I feel that it is a regrettable oversight that this note was not brought to the notice of His Majesty's Legation at the time of the initialling of the draft agreement.
Mr. Hillier tells me that he and his three colleagues are of the opinion that it is of the utmost importance that the validity of the initialled agreement as a binding instrument should be upheld; that once that principle is called in question the present negotiations cease to be on solid ground; and that they carnestly deprecate any step which might prejudice that position.
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