PUBLIC RECORD OFFICE
Reference :-
TTC.O. 882
6
PUBLIC RECORD OFFICE, LONDON
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH—NOT TO
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Hunanese of weight and experience. The reply, however, was that while His Excel- lency Ch'u fully approved of the Viceroy's proposed loans, he dare not, in the face of the clamour for keeping China for the Chinese, "open his mouth.”
Under these circumstances His Excellency was reluctantly forced to give up all idea of borrowing for the present. He thoroughly appreciated the fairness of our terms, and knew that six months hence a loan at even 94 might be quite impossible; but unless the Wai-wu Pu at least refrained from opposition he could not get the Imperial sanction, which was as indispensable for pledging provincial revenues as for making bonds saleable. He would let me know as soon as he saw a chance of getting a loan through, and he would not let our competitors profit by their obstructive tactics.
Finally, Mr. Wang was told to suggest that the best hope lay in letting the Wai-wu Pu calm down, and in refraining from pointing out the unwisdom of its present attitude.
I have, &c.,
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No. 184.
EH FRASER.
GOVERNOR SIR M. NATHAN to MR. LYTTELTON.
(Received 2.20 p.m., December 7, 1905.)
TELEGRAM.
General Loan and Inscribed Stock Amendment Ordinance passed to-day in accordance with instructions in your despatch of 3rd November.** Should be glad to know what are conditions of loan. Trust may be possible to borrow money at not more than three and a half per cent., which is interest due on present loan. Con- sulting Engineers should advise on the amount (and ?) date of probable money requirements on account of Hong Kong section of railway, bearing in mind that no money that cannot be provided temporarily out of revenue will be required till tunnel work put in hand.
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No. 185.
FOREIGN OFFICE to COLONIAL OFFICE.
(Received December 8, 1905.)
(Confidential.)
The Under Secretary of State for Foreign Affairs presents his compliments to the Under Secretary of State, and is directed by the Sir E Satow, 320, of Sept. 30.
Secretary of State for Foreign Affairs to transmit, to be laid before the Secretary of State for the Colonies, further sections of confidential correspondence, as marked in the margin.
Foreign Office,
December 7, 1905.
Enclosure in No. 185.
Sir E. SATOW to the Marquess of LansdOWNE.
(Received, Foreign Office, November 18.)
(No. 320. Confidential.)
MY LORD,
Peking, September 30, 1905. WITH reference to my telegram No. 189, of the 15th instant, I have the honour to transmit to your Lordship herewith copy of a letter which I have received from His Majesty's Consul-General at Hankow, with regard to the terms on which he
• No. 157.
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thinks the Wuchang Viceroy would accept the loans he requires for the construction of the Hupei Sections of the Hankow-Canton and Hankow-Szechuan Railways.
Mr. Cordès, the agent of the Deutsch-Asiatische Bank, who has been at Hankow endeavouring to secure these loans for his bank, has returned here without having succeeded.
I have, &c.,
ERNEST SATOW.
Consul-General FRASER to Sir E. SATOW.
DEAR SIR ERNEST Satow,
Kuling, September 20, 1905. SAVAGE sent up your telegram as to Chang's latest scheme of raising one loan to cover the Hupei sections of both the Hankow-Szechuan and the Hankow-Canton lines. I think told you that the latter section is only 80 miles at most, and that Chang is at variance with the other two provinces as to the share of the loans each should be responsible for. Hupei and Hunan are trying to make Kuangtung see that the section to Fatshan actually in running order is a valuable asset which should be taken into account, while Kuangtung blandly suggests that the length of line in each province should alone govern the apportionment of pecuniary responsibility, and Hunan would like to put some extra share on the other two as having the termini. I suppose that is why he seems now inclined to leave out Hunan, as he first did Kuangtung.
I have sent Savage the Chinese draft of a note to the Viceroy, in which he is reminded of his original proposal of a £3,000,000 loan for the construction of the Canton-Hankow Railway in Hupei and Hunan, which was telegraphed to you, passed on to the Foreign Office, and brought a response from the British Chinese Corpora- tion, whereas the Szechuan-Hankow Railway was broached only lately, and a distinct syndicate has asked leave to tender for it. It is added that the two sections, though in one province, are parts of distinct enterprises, just as the two syndicates, though both British, are independent of each other; to issue one loan for both sections would, in my superior's opinion, not be for the interest of Hupei or England. I understood from him that his reason for his new proposal was that the Hupei li-kin, the free asset which he decided to make the security for railway loans in this province, was too big for any one section; if that is his reason, the note submits that he could attain his object as well by giving notice to the tenderers that the two loans would, so far as Hupei is concerned, have, the same security and rank equally in regard to it. He is also reminded that he promised to consult Hunan by telegraph as to its loan security, and that the British Chinese Corporation are awaiting the answer so as to tender for the £3,000,000. I shall be in Hankow on the 24th, to await his invitation to an interview.
Chang's experience of foreign railway loans and agreements has made him very suspicious, hence his very guarded despatch of assurance. But his dislike for French and Belgians and Russians narrows the field of possible competitors, the Americans being also in disfavour, and I think that he also undoubtedly prefers us to Germans, though they are astute enough to offer him tempting terms, as I reported. He will come in time to see that foreign aid is necessary far more than he imagines now as to running and management, if he is not scared by immediate demands for the control of these and other points; and the Loan Agreements could stipulate for an inspector" with right to audit accounts, and, in case of default, for a General Manager and Secretary as well. His Secretary is already hinting that we will be asked to find a Chief Engineer. What Chang fears most is a mortgage on the line and land, and such mining privileges as obtain in Shantung.
I take it that an acceptable tender, besides the points mentioned by Chang in my telegram, No. 61, would be: Interest 44 or 5; issue price 91 or 95; security, the li kin revenues of the two provinces, with liability proportionate in first instance to length of line in each, ultimately to the amount of expenditure; an inspector, perhaps, paid by China, to watch and verify construction and expenditure, with right of lenders in oase of default to appoint a General Manager and a Secretary as well, and to have all accounts transferred to a special account at the Hong Kong and Shanghae Bank on which the Manager only could draw until the loan is paid off. The amount of loan would be payable in instalments not exceeding, say, £500,000 at intervals of not less than 6 (?) months, and each bearing interest from date of payment; China to have right to pay off loan at par on giving six months' or a year's
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