[This Document is the Property of His Britannic Majesty's Government.]
CHINA RAILWAYS.
CONFIDENTIAL.
[25805]
CO 23921
REC
REN 22. JUI II
159
[July 3.]
SECTION 2.
(No. 218.) Sir,
Sir J. Jordan to Sir Edward Grey.-(Received July 3.)
Peking, June 16, 1911.
I HAVE the honour to transmit herewith copies of correspondence which has been exchanged with the Governor of Hong Kong with reference to his Excellency's desire that I should press the Chinese Government to conclude a working agreement for the joint management of the Canton-Kowloon Railway on the lines desired by the colony.
I have, &c.
Enclosure 1 in No. 1.
J. N. JORDAN.
(Confidential.) Sir,
Governor Sir F. D. Lugard to Sir J. Jordan.
I HAVE the honour to solicit your very careful consideration of the matters I
Hong Kong, May 27, 1911. am about to refer to, and to ask for your effective assistance.
2. The colony of Hong Kong in undertaking the construction of the Kowloon section of the Kowloon-Canton Railway has expended an enormous sum (about 1,200,000/) in proportion to its revenue and wealth, and though this outlay has never heen alleged to be otherwise than for the eventual benefit of the colony, there is no doubt that it will also be a great benefit to the trade and shipping of the Empire. It is beyond doubt from the recorded correspondence that the colony in so doing fully anticipated that the clause of the loan agreement, which stipulated for joint working, would be read in the sense of "joint management," and that a working agreement on that basis would receive the energetic support of His Majesty's Government.
3. In deference primarily to the views of officials of the Canton section, this Government did not press for the negotiation of a working agreement until that section had advanced some distance towards completion. Early last year (1910) a draft was drawn up on the basis of a joint hoard, in which a liberal representation was accorded to China. That agreement was submitted by myself in England to the highest expert on railway agreements of whom I could hear, and his report, as you are aware, was that its proposals were fair and proper. The Chinese Government, however, objected to the principle of joint management, but submitted no counter- proposals which could in any sense be regarded as a serious scheme for working the two sections. In October last I visited Peking myself and had two very long conversations with his Excellency Liang Shi-yi, director-general of railways. I found him radically opposed to anything in the nature of joint management, and though (as it appeared to me) he was unable to reply to my arguments, I learnt more clearly than before the nature of his objections. His counter-proposals amounted practically to independent working, with arrangements for through booking and hire of stock, and he voluntarily, and without any suggestion on my part, suggested that, in calculating the rates to be charged by each section under that scheme, it would be clearly admissible for the Hong Kong section to impose a higher rate than the Chinese section, because of the much more difficult and costly nature of the construction of our section. On my return to Hong Kong I found that the director-general of the Chinese section, who had been nominated as the negotiator for a working agreement by the Chinese Government, had resigned, in consequence of the fact (which he freely admits) that he considered our proposals reasonable and proper, and did not share the view of his own Government. After some delay Mr. Chao was nominated as his successor.
4. Being very desirous of meeting the wishes of the Chinese Goverument in every way, I directed Messrs. Clementi and Lindsey (who represented this Government) to postpone the question of joint management, and proceed to a discussion of the
[2099 c-2]
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