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the central Government is shown by the fact that Shêng had to be summoned from his retirement to carry on these railway and currency negotiations. Shêng, who is now 70 and in frail health, is the last survivor of the Li Hung Chang school of statesmanship and intellectually is quite the equal of his great prototype. Shrewd, clever, and utterly unscrupulous, he has come into contact during his long and chequered career with foreigners of all classes and has established a reputation for successful business capacity of which the telegraph administration and the Hanyang Ironworks are the two chief monuments.
I have, &c.
Enclosure 1 in No. 1.
J. N. JORDAN,
Minutes of an Interview at Prince Ch'ing's Residence on April 5, 1911, respecting the Hukuang Railway Loan.
Present: Sir John Jordan, M. de Margeric, Mr. Calhoun, Count Luxburg,
accompanied by Messrs. Barton, Blanchet, Tenney, and Krebs.
Prince Ching, Na Chung-tang, Hau Chung-tang, Sheng Kung Pao,
accompanied by Chou Tzu-Chi and En Hon.
Sir John Jordan recalled briefly to Prince Ching the course of the negotiations on the subject of the loan agreement since the interview between the four Ministers and the Wai-wu Pu on the 27th December, 1910. On the assurance given by Na Chung-tang at that interview that the alterations considered necessary by the Chinese Government in the initialled agreement were not alterations of principle but only of detail, the Ministers had instructed the banks to resume negotiations with the Yuchuan Pu on this basis. Sheng Kung Pao had then promised to draw up a memorandum containing the desired alterations, which, owing to various delays, did not reach the banks till the end of February. A consideration of this memorandum disclosed the fact that a most important alteration of principle was contemplated, namely, the omission of the branch line from Ching-men-chou to Hanyang, and as at a subsequent interview Shêng had informed the banks that the acceptance of this omission was an essential preliminary to the conclusion of any agreement, the Ministers felt compelled to bring to the notice of His Highness the grave situation created by this departure from the agreed basis of the initialled agreement.
Prince Ching replied that he was aware of what had taken place. In view of the fact that on the death of Chang Chih-tung the settlement of this question had been entrusted by edict to the Yuchuan Pu, the best course would be for the banks to continue to discuss the matter with the board direct.
M. de Margerie pointed out that it was because discussion between the banks and the Yuchuan Pa had resulted in the present deadlock that the Ministers desired an explanation of the attitude of the Chinese Government in insisting on this unexpected alteration of principle.
Sheng then explained the reasons which rendered this alteration necessary; the provincial opposition to this loan existed even prior to Chang's death, and had been excited recently by the publication in the press of statements regarding the approaching completion of the agreement; this opposition could not be ignored by the central Government, and could only be obviated by his plan for entrusting the construction of branch lines to the local companies while the main lines were constructed by the Government. If this branch line were omitted, he was prepared to memorialise the Throne to enforce the agreement in spite of any local opposition on other points, but if the branch line were insisted on, local opposition to the main line would be increased, and he could not accept the responsibility of recommending the completion of the
agreement.
Sir J. Jordan observed that he had been in Peking since the commencement of the negotiations, and was certain that there had been no mention of alterations to meet provincial opposition during Chang's lifetime. In asking for the omission of this line, the Chinese Government were asking for a very important concession, and the Ministers would like to know what it was proposed to offer in exchange.
Sheng said he could not promise anything in exchange, but it was possible that the proposed amount of the loan 6,000,000l. would not prove sufficient to construct even the reduced mileage and he had thought of calling for a revised estimate of the
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cost of the main line, besides the Government had many other main lines to construct in the future, and the concession made by the banks in this instance would not be forgotten.
M. de Margerie asked whether it was proposed to insist on the other alterations contained in the memorandum also.
Shêng replied that the original list of alterations proposed by the railway bureau was much larger than the one handed to the banks, although not as highly important as the omission of the branch line, the other alterations contained in the memorandum were all essential and must be insisted on.
T
Sir J. Jordan said it was hardly reasonable, considering the assurances given by the Wai-wu Pu in the past, to expect the banks to accept the alteration en bloc, the Ministers felt that the proposed omission of the branch line was a matter of such importance that they should refer it to their Governments; but in order to render the proposal at all acceptable, they would like to be in a position to say at the same time that the Chinese Government was willing to adopt a reasonable attitude towards the remaining alterations; they would be prepared therefore to instruct the banks to first discuss the latter with the Yuchuan Pu and if a satisfactory settlement were arrived at, the Ministers would refer the question of omitting the branch line to their Governments.
Sheng replied that he foresaw no hope of a settlement if this course were adopted, it would only delay matters, and delay would give an opportunity for increased opposition and further imperil the successful enforcement of any agreement.
Mr. Calhoun pointed out that it would not advance matters if an agreement were come to on the branch line question only to find further progress blocked by difficulties raised over the other alterations, and for this reason it was preferable that a clear understanding should first be reached on the latter.
Sheng maintained his objection to this proposal and finally stated that he was not prepared to make any concession in regard to any of the alterations.
Sir J. Jordan then appealed to Na Ch'ing-tang and reminded him of the assurances he had given to the Ministers on the 27th December, and urged him to assist in solving the deadlock which a departure from those assurances had brought about.
Na replied by giving his recollection of the interview in question which tended to minimise the strength of the assurances given and-referring to the knowledge possessed by the Ministers of the difficulties which confronted China in dealing with this matter-he urged that these difficulties should not be increased by the delay which would be entailed by insisting on points which the Yuchuan Pu could not concede.
M. de Margerie pointed out that delay-which both parties wished to avoid--- could best be obviated by mutual concessions, if the Yuchuan Pa would waive the remaining alterations, the Ministers on their part could recommend the omission of the branch line.
Sheng replied that he could not consent to do this, and added that the remaining alterations were of a technical nature, with which only the banks were conversant.
Prince Ch'ing declared that in view of the fact that those present were not versed in the details of these alterations, it was not possible to agree to their withdrawal in exchange for the omission of the branch line. He repeated Sheng's promise that any concessions made by the banks in this instance would not be forgotten in the future, and again urged that they should be instructed to resume negotiations with the Yuchuan Pu.
Sheng assured the Ministers that he meant business and had no intention of going back on what he had said in the presence of the Prince that day. The agreement could only be concluded on the lines of bis memorandum, its enforce- ment would be a matter of great difficulty for him in any case, and in undertaking to enforce it, he was making a concession to the banks fully equal to anything they were being asked to grant.
Sir J. Jordan said the Ministers desired to know what instructions they should give the banks, for if the latter were merely told to discuss alterations on which Sheng was not prepared to yield, the result could only be another deadlock necessitating a further reference to the Prince. Shêng said the banks must be prepared to discuss the alterations with a view to making concessions, up to the present the omission of the branch line had been the only point touched on in their discussions; until he knew whether this would be agreed to, he could not say what prospect there was of an agreement on the remaining alterations.
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