PUBLIC RECORD OFFICE
Reference :--
TELEC.O. 882
6
PUBLIC RECORD OFFICE, LONDON
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC-
COPYRIGHT PHOTOGRAPH-NOT TO
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at Peking on the subject of proposed loans in connection with the Hankow-Canton Railway.
I am now awaiting a reply from Sir Ernest Satow to my telegram of the 11th instant.
I have, &c.,
Enclosure in No. 124.
M. NATHAN.
PARAPHRASE OF TELEGRAPHIC CORRESPONDENCE BETWEEN THE SECRETARY OF STATE FOR THE COLONIES, THE GOVERNOR OF HONG KONG, AND HIS BRITANNIC MAJESTY'S MINISTER AT PEKING.
21344/S.
I.
SECRETARY OF STATE to GOVERNOR, Hong Kong. (June 26, 1905.)
The Viceroy at Wuchang requests His Majesty's Government to assist him with a loan in order to buy up Pierpont Morgan's share in the Hankow-Canton Railway, and thereby to secure the control of the company. Security would be the opium tax revenue of Hupei and Hunan. Term would be ten years, with liberty to pay off after five. Interest at 4 per cent. The Imperial Chinese sanction would be obtained.
The Japanese and Germans are competing for the loan, and Satow reports that the issue will involve other concessions, and will generally affect British interests in the Yangtse Valley and in South China, which will be greatly advanced by an assurance of assistance from this country, while a reply that is unfavourable may adversely react on the negotiations for the railway from Canton to Kowloon, as the Viceroy at Canton is co-operating in this matter.
There are reasons which prevent His Majesty's Government from advancing the money, but it has been put forward that it may be in the interests of Hong Kong to do so.
I should be glad of your views with the least possible delay. You can ask Sir Ernest Satow for any details, but otherwise you should keep the matter absolutely
secret.
22272/8.
II.
GOVERNOR, Hong Kong, to Secretary of State.
(June 28, 1905.)
It is of paramount importance to Hong Kong that neither the Japanese nor the Germans should control the Hankow-Canton Railway, and that the negotiations for the railway from Canton to Kowloon should be quickly completed.
As His Majesty's Government are unable to advance the money to the Viceroy at Wuchang, I think that the Hong Kong Government should assist in the matter.
The easiest and quickest way would be for the Hong Kong and Shanghai Bank to make the advance, the Government guaranteeing the due payment of the interest promised by China.
If you concur in this, please telegraph at once whether I should negotiate with the manager of the bank here, or whether you will arrange with Sir T. Jackson in England.
III.
HIS BRITANNIC MAJESTY'S MINISTER, Peking, to Governor, Hong Kong.
(June 29, 1905.)
The Foreign Office have telegraphed as follows, with reference to a request from the Wuchang Viceroy, with whom the Canton Viceroy is acting, for a loan to enable him to obtain control of the Canton-Hankow Railway :--
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'It has been suggested that it might be in the interests of Hong Kong to advance the money required, and the Governor has been asked for an expression of his views in the matter, and referred to you for any details he may require, but told otherwise to observe strict secrecy.”
Please inform me as to your views. The Viceroy presses for an answer, and, in my opinion, the opportunity should not be missed, both on account of British interests generally and of the Canton-Kowloon Railway negotiations.
IV.
GOVERNOR, Hong Kong, to HIS BRITANNIC MAJESTY'S MINISTER, Peking. (June 30, 1905.)
With reference to your telegram of yesterday's date, I am strongly in favour of the Hong Kong Government assisting the Viceroy in the manner suggested, and I am in communication with the Secretary of State with regard to the easiest and quickest way of giving this assistance.
22272/S.
V.
SECRETARY OF STATE to GOVERNOR, Hong Kong.
(June 30, 1905.).
Referring to your telegram of June 28th, the Crown Agents can advance the money if I give an assurance that the sanction of the Legislative Council will be forthcoming later, if required. As the advance would, at any rate at present, be made at bank rate, the Colony would gain the difference between this rate and 4 per cent.
It is inadvisable to approach the bank to which you refer if this can be avoided.
You should endeavour, in concert with Sir Ernest Satow, to settle on the con- ditions on which you would lend the money. Such conditions might be the accept- ance of our Canton-Kowloon Agreement, and the issue of an Imperial Chinese decree for the loan, the latter condition being necessary to guard against the possi- bility of default by the Viceroy. An undertaking should also be given by the Viceroy that the redeemed shares will not be sold or pledged to others without
consent.
your
Sir Ernest Satow has since suggested that though the Viceroy does not want the railway to be mentioned in the agreement, we might demand a written assurance from him and the Canton Viceroy and the Hunan Governor that in the event of foreign capital and foreign engineers being required for railways in the Two Hu, the Two Kwang and the Liang Kiang Provinces, the first option of supplying both or either of them shall be given to Great Britain.
His Majesty's Government concur in this, and we further think that we might endeavour to secure an extensive assurance to cover material for the construction and equipment of the railway. We leave it, however, to your and Satow's discretion to obtain as much as possible for the interests of British commerce.
Assuming that in your judgment the general opinion of Hong Kong would be in favour of the policy indicated, if later on it becomes necessary to take them into confidence and to pass a Loan Ordinance, I authorise you to make arrangements on the above lines without referring further to me.
Let me know the progress inade and the dates and places at which funds will be required, as well as the exact amounts of the various instalments. Your telegram was repeated by the Foreign Office to Satow.
VI.
GOVERNOR, Hong Kong, to HIS BRITANNIC MAJESTY'S MINISTER, Peking.
I
(Dated July 1, 1905.)
propose. for your consideration, the following conditions for a loan of £1,100,000 from the Hong Kong Government to the Viceroy, Wuchang :-
Condition 1.-Imperial Decree sanctioning loan to be issued.