[This Document is the Property of His Britannic Majesty's Government.] 157
CHINA RAIL WAYS.
CONFIDENTIAL.
[25804]
(No. 247.) Sir,
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Sir J. Jordan to Sir Edward Grey.-(Received July 3.)
[July 3.]
SECTION 1.
Peking, June 14, 1911. I HAVE the honour to report that early in the month of January I received from the Wai-wu Pu a note in reply to that which I had addressed to them on the 17th November last, copy of which was enclosed in my despatch No. 418 of the 17th November, on the subject of the proposed Pukon-Sinyang Railway.
Ás you will observe from the accompanying copy, the note conveyed a refusal to entertain at the present time the proposal of the Chinese Central Railways (Limited) to negotiate a final agreement for the construction of the railway in question. The refusal was based on the contention put forward by the Board of Communi- cations, that its construction was not warranted by either commercial or strategical considerations.
I communicated this reply to Mr. Mayers, the representative of the Chinese Central Railways, who, while demurring on general grounds to the conclusions reached by the Board of Communications as to the value of the line, stated that his principals were prepared to entertain any reasonable modification of the alignment, should the Chinese Government be seriously averse from adopting that originally contemplated, and suggested that the Wai-wu Pu be invited to put forward an alternative scheme.
In view, however, of the fact that at that period the attention of the Board of Communications was almost exclusively absorbed by the negotiations for the Hukuang Loan Agreement, I deemed it inadvisable for the moment to press them in regard to the Pukou-Sinyang line.
In the light of subsequent events this course appears to have been justified; for since the conclusion of the Hukuang loan Mr. Mayers, who represents also the British and Chinese Corporation, has had several conversations with the director of the board, his Excellency Sheng Kung Pao, which hold out hope of a satisfactory settlement not only of this question, but also of the more vexed one of the Shanghai- Hangchow-Ningpo Railway.
Immediately after the signature of the Hukuang agreement, his Excellency Sheng told Mr. Mayers that he wished to settle the matter of the Ningpo Railway. At a subsequent interview his Excellency, after confirming his promise to replace the Shanghai-Ningpo loan funds, explained that the Belgian financiers were pressing for an extension eastwards to Hsian-fu, the capital of Shensi, of their railway from Kaifeng-fu to Honan-fu. He, however, wished to proceed immediately with a line from Hsian-fu to the coast on the basis of an inter-group loan, including Belgium, whose claim to preference over the Houan-fu-Hsiang-fu section could not be denied (see Rockhill, Treaties and Conventions with China and Corea, 1904," page 399, article 23), and enquired as to the possibility of transferring the Ningpo Railway Loan funds to the Kaifeng-Hsüchow section, which would thus become the British share in the transaction.
Further discussion led to the formulating of another suggestion, which, while taking into account the execution of the preliminary agreement in regard to the Pukou-Sinyang Railway, which his Excellency at first affected to regard as so much waste paper, averts the possibility of friction which might have arisen out of the previous scheme between the British and Chinese Corporation and the Central Chinese Railways, in view of the understanding between them to abstain respectively from railway enterprise in the regions north and south of the Yang-tsze River, a considera- tion to which it would not have been reasonable to expect the Chinese Government to attach any weight.
The new suggestion was that the transferred loan funds should be applied to the construction of a line from Kiukiang through Nanchang to Ping Hsiang, a distance of approximately 250 miles; the funds being insufficient for this purpose, a supplementary loan should be issued when required by the four groups. A loan for the construction of the Kaifeng-Hsuchow Railway was to be allotted to the Central
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