CO882-(6-8) — Page 44

PUBLIC RECORD OFFICE

Reference :-

C.O. 882

سلسلسا

y

PUBLIC RECORD OFFICE, LONDON

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO

(31958.)

452

LI.

GOVERNOR, Hong Kong, to SECRETARY OF State.

(Despatched 12.20 p.m., August 28, 1906.)

My despatch of 26th July. Canton-Kowloon Railway. I have sent the fol- lowing telegram to His Britannic Majesty's Chargé d'Affaires at Peking :-

Telegram L. repeated.-NATHAN.

LII.

GOVERNOR, Hong Kong, to His BRITANNIC MAJESTY'S CHARGÉ D'AFFAIRES, Peking. (Despatched 2.30 p.m., September 3, 1906.) Canton-Kowloon Railway negotiations.

NATHAN.

LIII.

What progress has been made?—

HIS BRITANNIC MAJESTY'S CHARGÉ d'Affames, Peking, to GOVERNOR, Hong Kong. (5.55 p.m., September 4, 1906. 6.39 p.m., September 4, 1906.)

Your telegram of yesterday. Canton-Kowloon Railway negotiations. Little or no progress was made at the first two meetings, another was held yesterday, the result of which I do not yet know, as Mr. Bland left this morning for Tientsin. I will keep you fully informed.-Carnegie.

Enclosure 2 in No. 295.

CANTON-KOWLOON RAILWAY.

MINUTES OF MEETING held at the Waiwupu on Thursday, 23rd August, at 3 p.m.

I'RESENT:

Their Excellencies Na-tung and T'ang Shao-yi, representing the Waiwupu. Kung Taotai and Mr. Hu, representing His Excellency the Viceroy of

Canton.

Messrs. Chu Pao-fay and En, Secretaries to the Waiwupu; and

Mr. J. O. P. Bland, representing the British and Chinese Corporation,

Limited.

It was agreed that the negotiations should be conducted in Chinese. Mr. Bland requested that it be noted that the Corporation, recognising the special nature of the case, due to the railway being partly in Chinese and partly in British territory, was prepared to agree to certain modifications of the Nanking Railway Agreement and to meet, so far as possible, the views of His Excellency the Viceroy of Canton and of the Chinese Government, but that it should be clearly understood and recorded that such modifications would not constitute precedents, affecting the rights and interests of the Corporation under other agreements. The concession as originally granted by the Chinese Government gave the right of financing and constructing this railway under conditions not less favourable than those of the Lahan line, but the Corporation was prepared to meet the reasonable wishes of the Chinese Govern- ment wherever possible without affecting the essential conditions of the Agreement. (At this point His Excellency Na-tung withdrew.)

His Excellency Tang Shao-yi in opening the proceedings drew attention to the words "British Kowloon" in the preliminary agreement, which in his opinion were misleading, the term being applicable only to the city of Kowloon and not to the leased territory. It was understood and agreed that the Corporation's loan and construction apply only to the Chinese section of the railway, i.e., from Canton city to the border of the leased territory.

453

After some general discussion as to the basis and method of negotiations, His Excellency Tang suggested that the Canton Viceroy's proposals, handed to Mr. Bland on the 9th April last, should be discussed seriatim, which was agreed to.

The

His Excellency, however, observed that these proposals would require modifica- tion in several particulars to make them acceptable to the Chinese Government. railway was a Chinese Government line, the Imperial Government would guarantee the interest, and the Imperial sanction was therefore necessary for any agreement made in respect thereof. Mr. Bland thought that His Excellency the Viceroy's proposals had been authorised by the Government, and in regard thereto, generally speaking, the Corporation was prepared to come to an agreement, but if further modifications of the Nanking loan terms were required, the matter might involve serious difficulties.

Turning to the conditions proposed by His Excellency the Viceroy of Canton, it was understood and recorded—'

Clause 1. That the loan should be an Imperial Chinese Government loan with bonds issued in London and interest guaranteed by the Chinese Government in the usual manner. Under these circumstances the pledging of provincial revenues, such as the Salt Gabelle, was held by the Government to be inadvisable and unnecessary.

As to the price, considerable discussion took place, Mr. Bland suggesting that no fixed price be named, but that the Corporation agree to pay to the Chinese Govern- ment the actual issue price, less 6 points.

Kung Taotai was of opinion that a loan on terms similar to those given by the Hong Kong Government to His Excellency Chang Chih-tung would be more satisfactory.

His Excellency Tang Shao-yi held that the expenses of underwriting flota- tion, &c., and the Corporation's remuneration would be fully met by a total reduction of 5 points. Mr. Bland drew attention to the fact that the Corporation had hitherto received little or no financial benefit from its relations with the Chinese Government, and therefore hoped that if the other conditions of the contract came to be amicably arranged to the latter's satisfaction, a quid pro quo might reasonably be forth- coming in the form of more liberal terms of remuneration. The Viceroy had suggested 95 as the price, but in the existing conditions of the market the Corpora- tion's proposals should give the Chinese Government 96 or 97. The question was eventually left for further discussion, it being recognised that its settlement must depend upon that of other clauses in the contract, e.g., the question of profit certificates.

As regards the latter, and the question of control after construction, the Corporation was prepared to waive its rights, provided the other conditions of the agreement could be amicably adjusted.

As regards the term of the loan, proposed by the Viceroy at 50 years with the option of redemption after 10 years, Mr. Bland pointed out the unfavourable effect of so short a term upon bond buyers, and suggested that a premium of 2 per cent. be payable upon any bonds redeemed before the lapse of 25 years.

(lause 2. Control during construction. This subject was generally discussed. His Excellency Tang Shao-yi expressed the opinion that the interest being guaranteed by the Imperial Government, a system of control such as that provided for in the Nanking Agreement was inadmissible and a Board of Commissioners undesirable. Mr. Bland thought that if the position and powers of the Engineer-in- Chief and Auditor appointed by the Corporation were satisfactorily arranged and defined, this question should not present great difficulty: but it was essential for the purposes and success of the loan that the railway be built and equipped in a thoroughly efficient manner by the Corporation under the direction of the Chinese Government's representative. (This matter was also discussed under Clause 6.)

Clause 3. Elimination of this clause proposed.

Clauses 4, 5, 7 and 8. Not discussed.

Clause 9. His Excellency Tang Shao-yi, whose views were supported by the Canton Viceroy's delegates, stated that the Viceroy's proposals for commission on material were not acceptable to the Government. He held that as the selection of the materials lay primarily with the Engineer-in-Chief, under the direction of the Chinese Government's representative, and as the Engineer-in-Chief was a paid employee of the Chinese Railway Administration, the Corporation was not called upon to incur responsibility or to render services in respect of construction, and that payment of commission was therefore inadmissible. In the case of goods