PUBLIC RECORD OFFICE
Reference :-
mwimmin TTIC.O. 882
6 PUBLIC RECORD OFFICE, LONDON
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC-
COPYRIGHT PHOTOGRAPH-NOT TO
416
and translation of His Excellency Chang's detailed defence of his policy in regard to the Hankow-Canton Railway Resumption Loan and proposed Construction Loan
The Viceroy's account of his negociations with us is not strictly accurate, but it is gratifying to find him and the Hunan gentry, usually called the strong re- actionaries, really an advocate of a loan on reasonable terms, while it is the progres- sive Wu Ting-fang and his friends who from personal motives prevent England and China from arranging for the prompt construction of the southern trunk line.
I have, &c.,
Honourable L. D. Carnegie, M.V.O.,
His Majesty's Chargé d'Affaires,
His Britannic Majesty's Legation,
Peking.
E. H. FRASER,
Consul-General.
MEMORIAL by Viceroy Chang Chih-tung in reply to attack of the censor_Huang Ch'ang-nien on his loan for resumption of Hankow-Canton Railway Concession.
(Condensed Translation.)
The Grand Council forwarded following Decree of 24th November, 1905 :- The censor, Huang Ch'ang-nien, represents that, railway rights being most important and the redemption charges hard to meet, it is essential to start building and strictly to keep out interference. The abuses flowing from loans to build rail- ways are so many that the three provinces should subscribe shares to start building so as to maintain our rights; they should not be allowed to raise a foreign loan. The five points in the censor's memorial let Chang Chih-tung report the facts, &c.
The memorialist is filled with admiration and awe on humbly perusing the above proof of Their Majesties' care for railway administration and precaution against abuses arising..
On receiving the Rescript charging him with the recovery of the Canton- Hankow Railway, he proposed to the American China Development Company to cancel their agreement. He was very well aware that the Company was in a very strong position and had excellent means of information, while its having many supporters amongst the Chinese official body made procedure difficult.
But he felt that as the control of railway rights by others was a vast and vital injury, the only way of rescue lay in determined resumption, and so he did not dare to shun illwill or shrink from difficulties. By cypher telegrams he co-operated as opportunity offered with Liang Ch'eng, Minister to the United States of America, and argued the rights of the case. For over a year the worry went on with frequent storms and a crop of side issues, ground being lost so soon as gained and agreement wearily attained being suddenly upset.
Honoured with the Imperial instructions he maintained his fixed view. On- lookers all said China's lost right was gone beyond hope, like spilt water. Later, after he had repelled the American merchant Bash's importunities, the advocates of transferring from American to American disapproved more than ever of his proceedings; defamation was rife, and every sort of obstacle was raised with the determination not to rest until this situation had been altered in their favour.
Fortunately Their Majesties' perspicacity and resolution gave support above; the popular feeling in the three provinces was united below. The American Government saw that China's purpose was resolute and steadfast, the Development Company's arguments would not stand; and by changing "cancellation" to redemption" the question was reduced to a matter of business capable of calm solution, without the least friction in our foreign relations. Then, at last, the Company came under control, and in September the redemption compact was agreed on, quite contrary to the expectation of the pro-American gang, whose hatred at having to let vast gain be lost to them was rancorous. As they could not yap at the redemption of the line they had to start a theory that the loan substituted English for American, spreading stories and making an outcry in the papers. reversing right and wrong, and pouring out abuse right and left. The facts of the case are plainly manifest, and the real Hunan gentry knew them long ago..
417
The talker without inquiry worried Their Majesties with reports, and since Their Majesties are good enough to vouchsafe an Imperial inquiry, he has the honour to set forth explicitly for Their Majesties' consideration answers to the five puzzles propounded by the censor in question.
The Censor's memorial says :-
1.
"The said Viceroy the moment he was charged with the abrogation of the concession should have encouraged the gentry and people of the three Provinces to provide redemption funds so as to stand in a secure position. But when time came he told lies, willingly swallowed the tempting bait, borrowed at interest £1,100,000 of English gold, and of his own motion made the opium excise, the State's revenue, the security."
When he started the abrogation proposal the memorialist sent telegrams to the authorities and gentry of Hunan and Kuangtung to provide actual funds. The Hunan gentry at first proposed to levy a grain excise per mou, and a poll-tax based on salt used; the Kuangtung gentry proposed to start a lottery and to get shares taken abroad. Hupci being the very poorest our gentry and scholars only proposed to help by realising the district reserve grain and candidates' grant in aid. In fact, there were either mere proposals or impracticable suggestions or funds too petty to be serviceable or too remote for realisation. The divergence of general opinion and diversity of the methods of raising funds proved the absence of any scheme for the immediate provisions of large sums. The then acting Viceroy at Canton, from his halting place at Wuchou, on 17th December, 1904, telegraphed that the means of the gentry were quite unreliable, and the authoritics still less could take up such a great sum; so the three Provinces must jointly borrow foreign money to be repaid in terms of years proportionately. The Hunan gentry, Chang Tsu-Tang and Hsi Hui-hsiang, came to Hupei, and on being consulted strongly supported Ts'en Ch'un-hsüan's opinion, holding that as apart therefrom there was no plan of prompt efficiency; the case was urgent.
Foreign loans for railway construction are frequent all over the globe. Their advantage or harm depends simply on the terms of the agreements. If these are not clear any country whatever will suffer harm, while if they are clear any country whatever will not suffer harm. In the case of the Canton-Hankow loan from America the discount was heavy, the period long, and they were to undertake the work, and even mining rights were to a great extent lent to them. The result was to give others the control and to put railway rights entirely in the lender's hands- a tremendous detriment.
In the case of his English gold loan of £1,100,000 interest is only 4 per cent., there is no deduction or discount; a very great saving compared with the Board of Revenue's sterling loan from the Hongkong and Shanghai Bank last year. And yet the railway is not pledged, simply the three Provinces' own prepared opium excise stands as security: no right of interference with any rights is granted. This loan, principal and interest, is repayable in ten annual instalments, none of which exceeds £100,000 odd. The three Provinces share it in sevenths, Hunan and Kuangtung taking up three-sevenths each and Hupei one-seventh. The stipu- lated rice excise for charitable relief of the two Hu annually brings in Tls 7 or 8 hundred thousand. The Canton Viceroy, Ts'en, undertakes the provisions of actual funds to meet his share, and, besides, Kuangtung has the profit on running the completed line, some two or three lacs of Taels a year. Thus there are ample funds to meet the general loan charges. The agreement also provides that at any time after five years China may, if she chooses, pay off the whole balance due; so once there are funds to redeem there can be no obstruction or trouble. As to the prepared opium excise serving as security, in all previous loans there have been security funds. In all finance measures every fund is part of the State's revenue. and simply because this is a newly-raised fund of late years is it for the time being in a separate category, utterly dissimilar in nature and importance from the long- established regular Treasurer's and customs' funds and the likin office's funds, which affect the whole province.
Further, the prepared opium excise is common to, the three provinces, as foreigners all know, and although likin be abolished on increase of duty this excise will go on; so it is easy to get credit on. But as there are actual assets to meet the loan, the security is merely nominal, and not only has no effect at all on the
18845
#4