[This Document is the Property of His Britannic Majesty's Government.]
19697
CHINA RAILWAYS.
CONFIDENTIAL.
[14940]
No. 1.
PEC2 REGP 16 JUN 11
[April 21.]
SECTION 2.
Sir J. Jordan to Sir Edward Grey,-(Received April 21.)
(No. 103.) (Telegraphic.) R.
MY telegram No. 102 of 20th April.
Peking, April 21, 1911.
Sheng warned Mr. Hillier privately that present provincial opposition may lead to repetition of Shanghai-Ningpo Railway situation, and, fearing that a grave position may thus be created after large deposits have passed into the hands of the Chinese banks, Hillier is disposed to recommend his bank withholding consent to proposed terms of article 14 and insisting upon former control over funds, although he admits that this will most probably result in rupture of negotiations.
In discussing question with Hillier I have urged following considerations:
Sheng's statement is merely designed to shelter himself in conditions which have long been known to groups. It seems to me inconceivable that Hong Kong and Shanghai Bank, which has recently participated in several provincial loans, the proceeds of which passed out of their coutrol into native banks, should find such strong objections to proposed arrangement.
In reply to my enquiries, Hillier states that objections of his Shanghai and Hong Kong branches are also influenced by fears of the disorganisation of exchange market caused by large transfers, which would heavily affect them as leading exchange bank.
I have pointed out that we are bound to three other Powers and groups, none of whose representatives here raise any objections, and that Germans have made an exceptionally generous sacrifice in abandonment of branch line.
It would be deplorable if British bank by separating itself from the other groups were to bring about a collapse of the negotiations in which British political and commercial interests are so predominant.
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