PUBLIC RECORD OFFICE
Reference :-
111C.O. 882
6
PUBLIC RECORD OFFICE, LONDON
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC. COPYRIGHT PHOTOGRAPH-NOT TO
8
3. If the Hong Kong Government would guarantee
per cent, yearly, for
a certain number of years, it would ensure the success of a loan being floated to raise the necessary funds for construction.
Is there not a precedent for this?
Did not the Indian Government give a similar guarantee for the Burmah railway?
4. There is the question of whether or not the proposed line would pay in competition with the river traffic, and the consequent risk of the Government being called upon to pay any deficiency in the interest, but this risk would be very small for the following reasons:-
(a) During the first two or three years, whilst the line is under construction,
interest would be paid out of capital.
(b) The Chinese Government would give their own guarantee in addition to the security of the line: therefore the Chinese Government would have to default before any call could be made on the Hong Kong Government guarantee.
(c) There would be the earnings of the railway line between the Hong Kong
Government and the loss of the amount guaranteed.
(d) If the Hong Kong Government suffered any loss through being called upon to make good any shortage in the interest, they would have a claim on the Chinese Government, and also on any future surplus earnings of the railway.
5. The Chinese Government would not be a party to the indirect guarantee by the Hong Kong Government; that guarantee would be arranged with the Hong Kong and Shanghai Banking Corporation, who would issue the bonds on behalf of the British and Chinese Corporation, duly guaranteed by the Chinese Government and secured by the railway line, and such bonds would bear a clause stating that an independent guarantee had been given by the Hong Kong Government to the extent of per cent. per annum for a certain number of years.
6. If His Excellency entertains the proposal and will address the Colonial Office on the subject, the London Manager of the Hong Kong and Shanghai Banking Corporation will be pleased to call there to discuss details and explain terms of the British and Chinese Corporation's concession from China.
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No. 6.
FOREIGN OFFICE to COLONIAL OFFICE.
(Received February 18, 1904.)
[Answered by No. 14.]
Foreign Office, February 16, 1904.
SIR,
I AM directed by the Marquess of Lansdowne to acknowledge the receipt of your letter No. 3496/1904, of the 4th instant,* in which you enclose a despatch from the Acting Governor of Hong Kong urging that His Majesty's Government would do well to acquire a substantial interest in the Hankow-Canton Railway.
I am to state, for the information of the Secretary of State for the Colonies, that so far as Lord Lansdowne is aware, there has never been any question of His Majesty's Government acquiring an interest in the Hankow-Canton line, and that there is no prospect of such a proposal being favourably entertained by the Lords Commissioners of His Majesty's Treasury.
You also enclose a copy of a despatch from the Acting-Governor expressing sympathy with the views entertained by the Hong Kong Branch of the China Association as to the necessity of proceeding with the construction of the Kowloon- Canton Railway, and you state that Mr. Secretary Lyttelton attaches great import- ance to that undertaking,
Lord Lansdowne considers that it would be most desirable that the construction of this line should be proceeded with as soon as possible, and I am to state that he understands that, as soon as the British and Chinese Corporation have settled with
• No. l.
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the Chinese Government a point now under discussion with regard to the financing of the Shanghai-Nanking line, it is their intention to proceed with the negotiation for the final Agreement for the Canton-Kowloon railway.
I am to add that the British and Chinese Corporation appear to have some hope of obtaining a three per cent. guarantee by the Government of Hong Kong for the Canton-Kowloon line, and I am to enquire whether there is any likelihood of such a guarantee being given.
&c.,
7141
SIR,
(Confidential.)
-No. 7.
I am,
F. A. CAMPBELL.
ACTING GOVERNOR MAY to MR. LYTTELTON. (Received February 27, 1904.)
Government House, Hong Kong, January 30, 1904.
I HAVE the honour to transmit, for your information, the enclosed copy of a Memorandum which I have received from a source which I regard as entirely trust- worthy on the subject of action taken by the Director of Chinese Railways in conse- quence of shares in the American China Development Company, which is the Syndi- cate holding the Concession to build the railway from Hankow to Canton, having fallen into the hands of persons of different nationality to the original concession- aires.
It has long been notorious in this country that the Belgians are, in matters of Concessions for Railways, in China the brokers of the Russian Government.
That Belgians should hold shares in the Company referred to above is a fact that has been regarded with the most serious apprehension by all those who are interested in the future prosperity of this Colony.
A railway connecting Hong Kong with Canton would, as I have already ventured to point out in previous despatches, greatly benefit this Colony. But if such railway were only a branch line, as it were, of a trunk railway between Canton and Hankow, the stimulus to the trade and further expansion of this important centre of trade would be such as to probably raise this port at once to the position of the first, instead of the third, port in the world, and to enormously increase the volume of her trade.
It is, therefore, of paramount importance to British trade in this quarter of the globe that the trunk line should not fall into the control of a Power that might use it to our detriment rather than to our advantage.
I consider, therefore, the information supplied to me of sufficient importance to communicate it to you by telegram this day, and in the interests of this Colony I venture to express the hope that His Majesty's Government will take into serious consideration, if it has not done so already, the question of obtaining a substantial interest in the Hankow-Canton Railway.
This might be done by a revision of the terms of the Concession in favour of the admission of British shareholders or by cancellation of the Concession and its re- grant on such revised terms.
I have, &c..
F. H. MAY, Officer Administering the Government.
Enclosure in No. 7. CANTON-HANKÓW RAILWAY.
January 23, 1904.
By the Contract of April, 1898, between Sheng, Director of Chinese Railways, and the American China Development ('ompany, the 52 stockholders of that Com- pany were given the Concession for the Canton-Hankow Railway, under certain con-
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