PUBLIC
RECORD OFFICE
Reference :-
TTIC.O. 882
6 PUBLIC RECORD OFFICE, LONDON
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO
382:
Enclosure 2-in No. 251,
Mr. J. O. P. BLAND to His Excellency Sir Matthew Nathan.
The British and Chinese Corporation, Limited,
Hong Kong, April 11, 1906.
DEAR SIR MATTHEW NATHAN,
I SEND you herewith enclosed, in compliance with your request, a copy of the précis translation of the Canton Viceroy's latest proposals. The Joint Managers are of opinion that it is advisable to comply with the Viceroy's request and endeavour to obtain at Peking conditions more in accordance with the Chinese Government's undertakings. I shall therefore proceed by the German mail to- morrow. It will be necessary for me to obtain the opinion of the British Minister before advising the Board further in regard to the Viceroy's proposals, &c. The position is difficult in many ways, and not the least of our problems is the carrying out of the working agreement for the Kowloon Railway, while at the same time abandoning the principle of control, if we accept the principle of the Northern Railway Loan. I shall not fail to keep you informed and to ask your advice in these matters. Meanwhile, permit me to thank you for your cordiality and kindness.
I remain, &c.,
CANTON-KOWLOON RAILWAY.
Précis of Viceroy's Proposals.
J. O. P. BLAND.
The following are the amendments to the Proposals as to the Canton-Kowloon Railway submitted by Mr. Ross:-
moon,
The Viceroy will sign the final agreement with the Corporation as to the loan and the building of the railway from Canton to Kowloon, to be dated Kwang Su 32 year,
day, i.e.,
day,
month 1906. Signed at
on the one part by the Viceroy especially appointed by the throne for the purpose, and on the other part by Messrs. Jardine, Matheson and Company and the Hong Kong and Shanghai Bank, as representing the Corpora-
tion.
*
Whereas, in the 25th year of Kwangse, 2 moon 17 day (28th March, 1899) the Director General of Railways, Sheng, received orders from the Tsungli-Yamen, &c., &c. &c., and whereas the preliminary agreement stated that the Hu-ning final agreement should be adhered to and modified according to circumstances, &c., &c. Now, the following terms have been agreed to, that is to say :-
"1. The Corporation is willing to issue on behalf of the Viceroy a gold loan not exceeding £1,500,000 (14 million) as security for which the railway and the Salt Gabelle shall be first offered. The loan shall be issued at 95, i.e., for every £100 the Viceroy only receives £95. China takes no interest in the profit or loss to the Corporation in the sale of shares. The interest is payable twice a year, and is to
The loan shall run for 50 years. be at 5 per cent. per annum.
After the date of signature, when the loan is, in accordance with subsequent articles, repaid in instalments or a lump sum, the payment of interest shall cease at the same time.
"2. The loan is to be used for the building of the railway and the purchase of material, rolling-stock, and also to pay the interest during construction. building of the railway, the purchase of rolling-stock, and the management of the line is to be under the superintendence of the Viceroy. One line is to be built but the foundations are to be prepared for two lines. The land for the line is to be bought by the Viceroy. The construction of the line, whether by sections, or by letting out to contractors, or any other way, must be decided by the Viceroy. It is most important that the railway be constructed both solid and economically.
The
"Should any money be left over after construction the Chinese Government is to decide, upon the advice of the Viceroy, whether it is to be paid back as part payment, or whether it is to be kept in the Hong Kong and Shanghai Bank on interest for payment of the interest of the loan, or whether it is to be used for any purpose beneficial to the railway. Care must be taken of the customs and habits of the natives. The labour contractors are to be experienced Chinese agreeable to the railway office, and they are to work in accordance with the specifications of the
383
Chief Engineer. The final plans and specifications must receive the Viceroy's sanction.
"3. The Salt Gabelle (estimated with old and new taxes at Tls. 1,000,000) and the land bought, or to be bought, shall be legally held as security, together with the materials, rolling-stock, buildings, and all other property, as well as the income after construction. Should the receipts after construction exceed 20 per cent. of the capital then the Salt Gabelle shall be released, but the other securities shall still stand.
"4. Within six months after signature of this final agreement, the Corporation must issue £1,000,000, otherwise this final agreement stands cancelled. The balance of £500,000 must be issued within three months after receipt of notice from the Viceroy. The money is to be placed by the Corporation and the Chinese Minister in England in the Hong Kong and Shanghai Bank in London. The money for each section shall, with the sanction of the Viceroy, be transferred to Hong Kong; the rate of exchange to be reported to the Viceroy and the Chinese Minister. Money not in use in bank must receive customary interest. The bank accounts are to be submitted every three months to the Viceroy for signature, and transmitted to the Foreign Revenue and Commerce Boards.
5. For this loan the Salt Gabelle revenues and railway being given as security the raising of the money is a matter that concerns the bank.
"6. A railway office will be established in Canton to superintend the construc- tion and subsequent working of the railway. It is to consist of one Chinese Superintendent appointed by the Viceroy, one English Chief Engineer, one English Auditor, both to be recommended by the Corporation to the Viceroy. English and Chinese engineers and other experts to be employed. All employees, except only the Chief Engineer, are subordinate to the Chinese Superintendent, and can be dismissed by him with the sanction of the Viceroy. Disagreement between the Chief Engineer and the Chinese Superintendent is to be decided by the Viceroy and the Corporation. Disagreement between the Viceroy and the Corporation is to be decided by the Wai Wu Pu and the British Minister. The Chief Engineer must Accounts are to be kept in English and respect and obey the Viceroy's orders. Chinese, open to the inspection of the Auditor. Expenditure must receive the Viceroy's sanction.
"7. A legal mortgage is to be drawn up in terms of Article 3 and handed to the Corporation. The mortgaged railway cannot be sold or remortgaged without the sanction of the Corporation.
**8. On default of payments the Corporation is to enter into possession of the railway.
9. All material bought by the Corporation is to be at market prices, and the Corporation is to get 5 per cent. commission.
10. Chinese police soldiers will protect the railway at the expense of the railway.
"11. Telephones and telegraphs for the railway must not interfere with the profits of the Government Service.
12. The profits of the railway are to be placed in the Hong Kong and Shanghai Bank until loan is repaid.
18. Any negotiations concerning the loan are to be negotiated between the Viceroy and the Corporation.
"14. Materials, &c., are to enter free of customs duty, likin or other dues. After construction, duty and likin on goods carried shall be arranged by China.
15. The interest on money in the banks and the profits of traction on every finished section shall be used to pay the interest on the loan. If insufficient, the interest is to be paid out of the capital of the loan. After the railway is built, the interest and amortisation and the bank's commission, must be paid to the bank in Hong Kong a fortnight before the interest is due, to be remitted to London, at the exchange ruling on the day of payment into Hong Kong. If the money is ever insufficient to repay interest and loan, the Viceroy, and failing him, the Chinese Government, will find other means of paying it.
"16. Where the Hong Kong and Shanghai Bank does not establish branch banks along the line, they will make arrangements with Chinese banks for facilitat- ing the movement of money;
"17. The successors and agents of the Corporation must be English or Chinese no other foreign nation can succeed thereto.