PUBLIC RECORD OFFICE
Reference :-
'| ། ། །
C.O. 882
6
PUBLIC RECORD OFFICE, LONDON
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO
44
of any new Company being entrusted with the construction or working of the line
any part of it, it shall have a British domicile and British Directors.
or of
(B) In view of the long time that has elapsed since the Corporation made their original agreement with the Chinese Government, and of the desirability of avoiding any further delay in carrying out this important work, it will be necessary for the agreement with the Hong Kong Government to contain a clause which, in the event of the Corporation failing to raise the necessary funds and to begin the construction of the Chinese section of the railway within one year of the date of the new agree- ment, or in the event of their failing to complete the section within three years of that date, will debar the Corporation from raising any objection to the cancelling of the concession by the Chinese Government.
(c) Before the agreement is finally signed it will be necessary that it shall be accepted by the Legislative Council of Hong Kong, inasmuch as the revenues of that Colony will be largely pledged for the construction of the part of the railway which will fall within Hong Kong territory.
(D) It still appears to the Secretary of State that the proposal made in my previous letter to lease the line when constructed to the Corporation, or to a railway company promoted by it, will, by securing unity in responsibility and direction, best secure efficiency in the working of the railway, and he would wish this proposal to be again considered by the Directors, who should understand that inasmuch as the primary object of the Hong Kong Government is to facilitate communication between Hong Kong and Canton in the interests of British trade in Southern China, arrange- ments may probably be accepted which in ordinary circumstances might be regarded as unduly liberal to the Corporation. The following two alternatives are suggested: (1) That the line shall be leased to the Corporation at a fixed rental sufficient to cover interest and sinking fund on the cost of construction throughout the period of the lease and dating from the issue of the railway loan by the Hong Kong Govern- ment, the Corporation taking the profits on the working of the whole line, but giving a guarantee for the punctual payment of the interest and sinking fund throughout the period of the lease on the expenditure incurred by the Hong Kong Government, and for the proper maintenance, to the satisfaction of a Government Inspector, of the Government line and its equipment.
(2) That the payment to the Colonial Government by way of interest and sinking fund shall be a first charge on the profits of the whole line after paying working expense, and the cost of maintenance as above, and not merely of the British section of the line, and that any profits accruing above a certain substantial rate of interest to the shareholders, the payment of which interest will rank after the payment of interest and sinking fund to the Colonial Government, shall be divided between the Corporation and the Hong Kong Government on the basis of the respective cost of constructing and equipping the two sections. Such cost to be calculated exclusive of any expenses incurred in raising funds for the undertaking beyond such reason- able and necessary expenses as may be specifically provided for in the agreement, and any commission on materials supplied.
5. I am to ask the Corporation to be good enough to state definitely whether they accept the requirements numbered (A), (B) and (c) in the preceding paragraph, and whether they are prepared to accept either of the two alternatives under (D). If they are not prepared to accept either alternative, I am to enquire whether they still adhere to their proposal for a Board of Management. In this latter case they must understand that their proposal can only be considered if so modified as to allow the Colonial Government an adequate share of the control and of the revenue of the whole undertaking, that is to say, a representation on the Board and a share based on the relative cost of constructing and equipping the Hong Kong and Canton sections of the line, exclusive of any agreed expenses incurred in raising funds for the undertaking and any commission on materials supplied. Subsidiary questions, such as the duration of the lease and the rates of interest, &c., can be considered when the Directors of the Corporation have stated their views on the points raised in this letter.
I am, &c.,
C. P. LUCAS.
22910
(Confidential.)
45
No. 26.
FOREIGN OFFICE to COLONIAL OFFICE.
(Received June 28, 1904.)
The Under-Secretary of State for Foreign Affairs presents his compliments to the Under-Secretary of State, and is directed by the Secretary of State for Foreign Affairs to transmit, to be laid before the Secretary of State for the Colonies, further as marked in the margin, to which special
Affairs of China, June 6, Section 5. section of confidential correspondence, attention is called.
Foreign Office, June 27, 1904.
Enclosure in No. 26.
Sir E. SATOW to the MARQUESS OF LANSDOWNE. (Received June 6, 1904.)
(No. 132. Very Confidential.) MY LORD,
Peking, April 11, 1904.
In continuation of my immediately preceding despatch, I beg to report that I pointed out to Mr. Stewart that the question of opening Waichow was linked together with that of the Kowloon-Canton Railway in the letter of the 12th December last from the Hong Kong branch of the China Association to the parent body in London. I observed that the question of the immediate construction of the railway took up three-quarters of that letter, and it was described as a larger and more important question than that of the opening of Waichow. I added that I entirely agreed with the observations of the Committee on this matter and with the remarks made by Sir Henry Blake in his farewell speech of the 20th November last.
Your Lordship will notice that the Hong Kong Committee propose a route for the Kowloon-Canton Railway, which would cross the East River at Sheklung, whence it would be easy to run a branch up to Waichow, and, in the opinion of Mr. Stewart, this would be of equal utility, as far as trade is concerned, with the opening of that place as a Treaty port.
In connection with this subject he gave me an extract from the Minutes of a meeting of the General Committee of the China Association held in London on the 22nd January with Mr. Keswick, M.P., in the chair, of which a copy is inclosed. To some of the statements contained in this document I have the honour to direct Your Lordship's attention.
At the meeting in question the letter of the Hong Kong branch, previously referred to, was read, requesting the Committee to urge upon Your Lordship's Office the desirability of the immediate opening of Waichow, and complaining of the delay in the construction or the Kowloon-Canton Railway.
The Chairman stated that “ (1) it had been necessary to wait until the Shanghae- Nanking Railway Agreement had been signed before taking steps to formulate the final contract for the Kowloon-Canton line, and it should be borne in mind that (2) delay was also in great measure due to the state of affairs in China consequent upon the Boxer troubles; and (3) that negotiations were suspended at the request of the Chinese authorities."
As to (1), it may be observed that as the final Agreement for the Canton-Kowloon Railway was to be subject to the provisions of the final Agreement for the Shanghae- Nanking Railway, and as the latter was signed on the 9th July, 1903, the negotiations for its conclusion might, as far as this provision is concerned, have been proceeded with last summer. But there is no reason to suppose that any steps have as yet been
taken to that end.