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LXXIII.
HIS BRITANNIC MAJESTY'S CONSUL-GENERAL, Hankow, to GOVERNOR, Hong Kong. (Despatched 12.40 p.m., September 7, 1905: Received 3.19 p.m., September 7, 1905.)
No. 6. See my telegram No. 5. Your telegram of yesterday morning was delivered after 9 p.m. As the Viceroy's loan from the Hong Kong and Shanghai Bank is also payable on the 6th of October, I have the honour to suggest to you that Article 7 of the Loan Agreement be altered to read as follows:-
"Of the proceeds of this loan, Government of Hong Kong on the sixth day of October, 1905, shall remit £400,000 to the Hong Kong and Shanghai Bank, Hankow, to the credit of Viceroy Chang, and shall on the said day also remit £700,000 to the credit of His Excellency Liang and the Hong Kong Government," &c., as in the present Article No. 7.
This will leave the Viceroy to pay any balance on his temporary loan here, and the question of exchange will be the business of the Hong Kong and Shanghai Bank and the Viceroy.
I will alter the schedule of payments and also Article No. 2 to agree with the date, October 6th, given in your telegram.
I have repeated this to His Majesty's Minister at Peking.-FRASER.
LXXIV.
GOVERNOR, Hong Kong, to HIS BRITANNIC MAJESTY'S CONSUL-GENERAL, Hankow. (Despatched 6.25 p.m., September 7, 1905.)
Your telegram, No. 6, was received after mine to you suggesting a collateral agreement.
I am now prepared to accept your proposed modification of Article No. 7, and when you inform me that Loan Agreement is signed, I will arrange for remittances of £400,000 to Hankow and £700,000 to New York, on the 6th of October.
I have repeated this to His Britannic Majesty's Minister at Peking-NATHAN.
LXXV.
GOVERNOR, Hong Kong, to HIS BRITANNIC MAJESTY'S MINISTER. Peking. (Despatched 6.35 p.m., September 7, 1905.)
I have sent the following telegram to His Britannic Majesty's Consul-General at Hankow:-
(Telegram No. LXXIV. repeated.)
-NATHAN
(32213.)
LXXVI.
GOVERNOR, Hong Kong, to Secretary of State. (Despatched 7.10 p.m., September 7, 1905.)
In continuation of my telegram of to-day's date the present proposal of His Britannic Majesty's Consul-General at Hankow is for remittances to be made on the 6th of October of £400,000 to the Hong Kong and Shanghai Bank, in repayment of the temporary loan, and of £700,000 to the Chinese Minister at New York.
This involved some alterations in the agreement.
When I telegraph "agreement signed," please cause effect to be given to the foregoing arrangements.-NATHAN.
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LXXVII.
HIS BRITANNIC Majesty's MiniSTER, Peking, to GOVERNOR, Hong Kong. (Despatched 8.27 p.m., September 7, 1905: Received 10.26 p.m., September 7, 1905.) No. 14. I have sent the following to His Britannic Majesty's Consul-General, Hankow, to-day---
"The Chinese Foreign Office communicated to me to-day, officially, the text of the Imperial Decree of the 15th of August, authorising the loan of £1,100,000 arranged by you with the Viceroy, and requested me to instruct you by telegraph to sign the agreement at once."
I see no objection, provided that the Governor of Hong Kong is satisfied.- SATOW.
DEAR SIR MATTHEW,
Enclosure 2 in No. 144.
Peking, August 18, 1905. Ir will serve to render the situation at Hankow clearer to you if I send the enclosed copies of correspondence from Mr. Fraser.
you
The German Minister sent to Hankow a Mr. Cordes, connected with the Deutsch-Asiatiche Bank to make offers to Chang Chilitung in connexion with the purchase of J. P. Morgan's interest in the Canton-Hankow line. Chang refused their help, but Cordes learnt from him or from someone in his confidence the terms of the arrangement with you, and the news rapidly spread. The Deutsch-Asiatiche Bank thereupon informed the Hong Kong and Shanghai Banking Corporation that the arrangement was a violation of the "agreement" (apparently meaning the agreement between the two banks to share all Chinese Government loan business), and that "they would take diplomatic steps."
This seems to indicate that the Colonial Office's latest proposal (of which I have heard from F. A. Campbell) for furnishing you with the money to lend to Chang has somehow leaked out.
The Belgian and French Ministers bere know all about the arrangements with Chang, and are no doubt doing all they can to 'frustrate its conclusion, as they had always regarded the Canton-Hankow line as their own in prospect.
Rockhill also is urging Roosevelt to prevent J. P. Morgan from surrendering his interest. I have told him that you have only promised the £1,100,000 to Chang, and that any further loan advanced by British capitalists for the construction of the line does not imply a concession to the British Government.
In connexion with the Viceroy's telegram published in Hong Kong on the 11th, I send you a copy of a letter I have written to James Scott; to its contents I should like to add, nevertheless, that the Colonial Office proposal for the Canton- Hong Kong line being administered for a term of years by a board on which we should have a majority will probably, if the Viceroy carefully examines it, appear to him to justify the belief that it is intended to have political consequences.
Secondly, that the cost of the Chinese section, as estimated by the engineers of the British and Chinese Corporation, augmented by the high price at which they have to borrow capital, will apparently be in excess of what they could afford. The Peking-Hankow line seems to have cost about £8,000 or £9,000 a mile. That of the Peking Syndicate lately taken over by the Chinese Government works out to about £8,000 a mile, including interest during construction and discount on the face value of the loan. The Chinese are well aware of these facts, and protest that the British and Chinese Corporation railways are too costly.
Paulings and Co. have sent out Mr. James Ginnell, who was a constructing engineer of the Shanghai Kwan-Hsinmintun Railway, and worked for some years under Kinder, to offer to the Chinese to finance and build railways for them at a cheap rate; he says £5,000 or £6,000 a mile. I told him that he would have my friendly sympathy in tendering for any lines not already promised to other British financial groups, but that if he wished to offer to build any of those, he must tell his people to secure the support of the Foreign Office.
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