PUBLIC RECORD OFFICE
Reference :~~
TLC.O. 882
wwiuiliu
6
PUBLIC RECORD OFFICE, LONDON
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Belgian pretension, which is quite untenable, is based on Sheng's letter given on p. 246 of Rockhill's Collection of Treaties."
Chang has given us a promise in regard to this matter, for which we have given valuable consideration.
French co-operation will not help us in this business any more than it has done in the Szechuan and Hankow Raifway, as they are distrusted by the Chinese. Reasons of this mistrust are mainly the Tonquin and Yunnan political railway, and the support accorded by the French Government to usurp authority by the Roman Catholic missionaries all over the country.
it seems to me that, before we consider any such French proposal, the French Government ought to abandon their opposition to the British Chairman with casting vote of the Chinese Central Railways.
I would add the following to the above views expressed to the Governor of Hong Kong:
The only way in which French could be admitted to participation without at once attracting the notice of Chinese would be by the Chinese Central Railways under- taking the Canton-Hankow line instead of British and Chinese Corporation. But even then it would not be long before it became publicly known that the French had 45 per cent. and the Belgians 10 per cent. participation, and we should incur the same odium as the abused American Development Company did for letting in the Belgians and French. Premature disclosure in the press of the terms of Anglo- French Agreement as to railway had a great deal to do with the prohibition to borrow money for the Szechuan-Hankow Railway, sent from Peking to the Viceroy of Wuchang.
Moreover, there is nothing in the Articles of Association of the Chinese Central Railways which would prevent French Legation from claiming the right to intervene officially on behalf of French capital involved, as they have done successfully in case of Luhan Railway, a Belgian undertaking, which they have dominated because they contributed three-fifths of the money. The Chinese would be afraid of a similar thing happening in this case.
understand grounds of general policy which make it undesirable to reject French advances, but I would urge that these should in no case be favourably enter- tained, unless France gives way about the Chairman question. We ought to main- tain the rights accorded to us by Chang in regard to supply of material and engineers; half latter were to be Japanese, and we cannot now ignore this part of stipulation.
Last sentence of your telegram. After careful consideration I remain of opinion that we have nothing to lose by waiting.
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No. 183.
CONSUL-GENERAL FRASER to THE MARQUESS OF LANSDOWNE. (Received December 6.)
(No. 5.)
MY LORD,
(Received, Colonial Office, February 14, 1906.)
Hankow, October 31, 1905. I HAVE the honour to forward copy of a despatch which I have this day addressed to His Majesty's Minister at Péking.
I have, &c.,
Enclosure in No. 183.
Consul-General FRASER to Sir E. SATOW.
(No. 54. Very Confidential.)
SIR,
E. H. FRASER.
Hankow, October 31, 1905.
I HAVE the honour to report a message, conveyed to me in strict confidence from the Viceroy Chang, through his Chief Secretary Wang, yesterday evening, on the subject of the loans for the Hankow-Canton and the Hupei Section of the Szechuan-Hankow Railways, which His Excellency has desired to arrange with British financiers.
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The former loan was mooted by His Excellency Chang early in the course of his negotiations for British aid in the resumption of the China Development Company's Concession, but the strong views of the Hunan gentry prevented details being gone into, and ultimately led the Viceroy to meditate, as a first step, the building of the short Hupei Section of the southern trunk line.
When I accompanied Messrs. Hillier and Ross on their visit to His Excellency Chang on the 12th instant they were prepared to offer to float a loan of £1,000,000 for the construction of this section, and the paying-off of the bonds issued by the China Development Company, which are mostly in Belgian hands. His Excellency informed us, however, that all construction loans for the Hankow-Canton line had been strictly forbidden, owing to the Belgian and French Ministers having set up a claim on behalf of the builders of the Pei-Han line to prior right to construct that line.
I pointed out on what a flimsy basis such a claim rested, and was assured that the Chinese Government had absolutely refused to entertain it, but that the Wai-wu Pu had been moved by this action of the Belgians and French to support the advo- cates of building this railway only with native capital.
The Viceroy treated the delay thus caused as only a temporary obstacle, but said its existence prevented any discussion except as to the Hupei Section of the Szechuan-Hankow line.
In the conversation that followed, the terms of a satisfactory arrangement were sketched out, leaving only the question of the net price to be paid His Excellency for further discussion.
On the 18th instant I sent the Viceroy a Chinese translation of those terms as noted down by Mr. Ross, and a detailed Memorandum based on the explanations of Mr. Hillier, as to the cost of floating a loan on the London market. The latter was designed to show His Excellency that the 94 per cent. offered was not a low figure, and I added that it might be slightly raised if the other terms were agreed to. His Excellency presently replied that the note of terms needed some modification, and so soon as he could get approval of the loan from his Government he would send his secretaries to talk the matter over.
On the evening of the 25th instant Mr. Wang sent me a confidential note explain- ing that the Viceroy must be sure of a decree of approval before he concluded an Agreement, and that he was trying by telegram to overcome the clamour in Peking in favour of using Chinese capital for railway building.
Yesterday evening Mr. Wang called to tell me, from His Excellency Chang, that there is at present no hope of obtaining sanction for any foreign loan for railway purposes.
He stated that Sheng Hsuan-huai and Wu Ting-fang felt the resumption of the American Concession as a disgrace to them, who were chiefly concerned in negoti- ating it; they had, therefore, supported the party that advised the transfer of that Concession from the China Development Company to some other American Syndicate. These opponents made common cause with the Hunanese and the students from Japan, who clamoured for the employment of China's own resources only, and de- nounced all railway loans as surrenders of their country's sovereign rights. When to these obstacles was added the Belgo-French claim, the metropolitan authorities, who were mostly more skilled in literary matters than in practical affairs, took fright, and forced the Wai-wu Pu to interdict all loans whatever for building the Hankow- Canton line. The Viceroy protested that his proposed loan would not mortgage the line, and would leave its working and control in Chinese hands, but it was in vain.
His Excellency Chang then telegraphed the terms of the loan for the Hupei Section of the Szechuan-Hankow Railway, laid stress on Hupei's inability to find the necessary capital, besides bearing a share of the cost of redeeming the American Concession, pointed out that the Szechuan line would be useless without an outlet through Hupei, and that the Chinese Government had promised to employ British capital for this line.
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The Wai-wu Pu replied that subsequent to that promise the throne approved the Szechuan Viceroy's scheme to build the whole line with Chinese capital; that France claimed to have had an understanding with Szechuan that she should give aid in building this railway, while Germany protested that the Deutsch-Asiatische Bank had first profferred a loan (ignoring the fact that the price was 924, and the Viceroy said he must be free to accept better offers); and that to authorize this loan would be cited as a precedent for other provinces. The Board, therefore, would not recog- nize any Agreement made by the Viceroy, who appealed to Chu Hung-chi, as a
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