PUBLIC RECORD OFFICE
Reference :-
TILLIC.O. 882
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH—NOT TO
PUBLIC RECORD OFFICE, LONDON
(Confidential.)
Dear Mr. KESWICK,
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(3.)
Downing Street, November 17, 1904. THE following is the text of the proposals which I read to you at our meeting on the 16th instant :-
(a) Conditions B (with reasonable reservations) and C of the Colonial Office
letter of the 24th June to be accepted by the Corporation.
(b) The Hong Kong and Chinese sections to be constructed and owned by the
respective Governments.
(c) The working of both sections as one undertaking to be provided for by
agreement between the two Governments.
(d) The general terms of such agreement to be arranged between the Colonial
Office on behalf of the Colonial Government and the Corporation. (e) Negotiations then to be opened with the Chinese Government by the Cor- poration, with the assistance and support of the British Government, for the Final Loan Agreement for the Chinese section; such agreement being on the lines of the Shanghai-Nanking Final Loan Agreement, but modified so as to meet the present circumstances and to admit of the proposed working agreement.
() The Corporation to obtain the concurrence of the Colonial Government in the Loan Agreement proposals before submitting them to the Chinese Government, and before accepting any important modifications in them. (g) The Chinese and Colonial Governments reciprocally to undertake in their joint working agreement not to allow their respective sections to pass under the control of any third Power or subjects thereof; and not to grant any concessions in their territories which would compete with or injure either section of the line, without the previous consent of the other party.
(h) Rolling-stock to be jointly provided and owned in proportion to the mile- age; commission not to be payable to the Corporation in respect of the proportion provided at the expense of Hong Kong.
(i) Any capital necessary for working to be provided by the two Governments in proportion to mileage; the Chinese proportion for this and for rolling- stock to be provided out of their loan, and to be earmarked for the purpose.
(7) Each Government to provide the necessary land for the railway at its own cost and to make its own arrangements as to the funds required therefor. (k) The line to be worked by a Joint Board of six members appointed, two by the Chinese Government, two by the Colonial Government, one by the Corporation, together with a General Manager to be selected by agree- ment between the Corporation and the Colonial Government,
After the redemption of all Chinese bonds, &c., the representatives
of the Corporation would disappear from the Board.
In the absence, &c., of any of these members, the party who appointed them to appoint a substitute.
Three to be a quorum; the decision of the majority to be final on all points not ultra vires or contrary to the agreement.
(1) Receipts and working expenses to be pooled; net profit or loss thereon to be divided between the two Governments in proportion to the actual cost of building and equipping the respective sections apart from cost of land and any commissions of whatever kind paid by either party to the Corporation or others.
(m) The Consulting Engineers and the Contractors to be the same for both sections, and to be selected by agreement between the Crown Agents as representing the Colonial Government and the Corporation. This is necessary in order to secure economy and avoid friction, especially as the point of junction has to be settled by agreement between the two parties.
(n) Work to be begun on the two sections simultaneously.
I understand that you will lay these proposals before your Board and let me know their views at the earliest possible date. As I mentioned at our meeting, they
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are made subject to any observations that we may receive by telegraph from the Governor of Hong Kong, from whom we expect to hear about the end of this month. If, as I hope, we reach agreement, it can be recorded in official correspondence.
DEAR MR. FIDDES,
(4.)
Yours, &c.,
G. V. FIDDES.
The British and Chinese Corporation, Limited,
3, Lombard Street, London, E.C., December 5, 1904.
I HAVE submitted your letter of the 17th ultimo to the Board who have given
it their careful consideration.
The Board, and particularly those members who are conversant with railway practice, feel that we could not justify Condition L to the Chinese and to the public who will be invited to take up the loan.
The common practice in working agreements appears to be to pool and divide in agreed proportions the through traffic, but not to pool the traffic which is entirely confined to one or other of the associated railways.
This practice seems to the Board to be the equitable method of dealing with the traffic, and I am requested to express the hope that you will see your way to arrange a further conference to consider the matter which the Board regard as important.
I may add that if this principle should be adopted, the Board consider that the circumstances entitle the Colonial line to special consideration in settling the division of the pooled traffic and they would agree to its being on the basis of proposal L.
In regard to the engineering and construction (proposal M) the Board agree that the Consulting Engineers should be the same for both lines, but they do not think it necessary that it should be positively stipulated that both lines shall be built by one Contractor. They would prefer a provision that both lines shall be built to the speci- fication and satisfaction of the Consulting Engineers and that construction shall be by contract or contracts or otherwise as they may advise.
As regards the other proposals, the only remark the Board have to make is with reference to A. They desire to draw your attention to the fact that considerable delay may arise from difficulty in getting the Chinese to agree to the terms of the Colonial Government's proposal for which the Corporation cannot be responsible, and the expression "the date of the new agreement" in condition B of 24th June must mean the date of the agreement finally made between the Corporation and the Chinese and ratified by the Hong Kong Government.
DEAR MR. KESWICK,
(5.)
Yours, &c.,
W. KESWICK,
Downing Street, December 7, 1904.
I HAVE received your letter of the 5th instant with some concern, for I had thought that I was on safe ground in adopting the proposal made to me by the Chair- man of the Corporation.
It seems to me that the course now proposed by you as regards "L" of my scheme destroys the equilibrium of the scheme, and I do not at present see my way to advise its acceptance.
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Your suggestion for a further conference makes it unnecessary to explain here what are my difficulties. Will you say what date will suit you and Mr. Macrae! Please let it be as soon as possible. I have been away for the last two days, and on my return I found, together with your letter, instructions to invite your earnest atten- tion to the interval that had elapsed since the date of your last letter.
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Yours, &c.,
G. V. FIDDES.
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