CO882-(6-8) — Page 50

PUBLIC RECORD OFFICE

Reference :-

TLC.O. 882

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PUBLIC RECORD OFFICE, LONDON

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

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construction or right to commission except when acting as agents for materials purchased in England,

Mr. Bland again pointed out that such a contention involved practical repudia- tion of the concession granted by the Imperial Government to the Corporation, and stated that his instructions did not permit of his entertaining any proposal other than that already submitted. He pointed out that in this case the line taken by the Chinese Government was less reasonable than that of the provinces, for both the Wuchang and Canton Viceroys had agreed to the Corporation's commission as reasonable and just.

At this point the meeting adjourned till Monday next, the 3rd September.

J. O. P. BLAND. August 31, 1906.

CANTON-KOWLOON RAILWAY.

MINUTES OF MEETING (the 3rd) held at the Wai Wu Pu, on Monday, the 3rd September, at 3 p.m.

PRESENT:

His Excellency T'ang Shao-yi;

Kung Taotai and Mr. Hu, representing the Viceroy of Canton; Messrs. Chu Pao Fay and En, Secretaries to the Wai Wu Pu; and

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

Limited.

The Minutes of the last meeting were accepted as correct.

Discussion of Article 9 of the Canton Viceroy's proposals was resumed, and continued at considerable length. His Excellency Tang eventually expressed his willingness to modify his previous decision so far as to agree that after tender British goods should have preference at equal prices, and that 5 per cent. commis- sion would be paid on all purchases of British goods.

Mr. Bland recapitulated the arguments already advanced, and expressed the opinion that it would be useless to lay such a proposition before the Directors of the Corporation. He further drew attention to the fact that the Chinese Government, which had hitherto put forward the views of the provincial authorities and gentry as a reason for modifying the terms of the Shanghai-Nanking Loan Agreement, was, in the present instance, endeavouring to impose conditions far more stringent than those desired by the Provincial Viceroy.

His Excellency T'ang Shao-yi stated that the terms of the Shanghai-Nanking Railway's Loan Agreement could not be made applicable to the present negotiations. He contested the validity of the preliminary agreement because the Corporation was not entrusted with the construction of the entire line from Canton to Kowloon city, maintaining that the building of the railway between these two points by the Corpo- ration was an essential condition of that agreement, whereas it now appeared that the Corporation was only concerned with the section in Chinese territory. He claimed for the Chinese Government the same discretionary powers as those exercised by the Hong Kong Government

Mr. Bland, in reply, stated that at the time of sanctioning the preliminary agreement of March, 1899, the Chinese Government was fully aware that the Corporation's construction rights were limited to Chinese territory, and that the expression" British Kowloon," in Clause 1 of that agreement, could only mean the frontier of the leased territory, and was never intended to mean Kowloon city. By the concession granted in September, 1898, the Corporation was given the right to finance and build a Chinese railway in Chinese territory on terms not less favourable than the Luhan concession; several points had already been conceded to meet the views of the Chinese Government, and in view of conditions admittedly altered since that date, but His Excellency's present proposals were tantamount to denial of all rights and advantages under the concession.

His Excellency Tang Shao-yi, after consultation with the Canton Viceroy's delegates, stated that the terms offered could not be further modified, and Mr. Bland, being unable to accept them, undertook to report the situation to the Board and to convey their reply in due course.

The meeting then proceeded to consider the remaining clauses of the Canton Viceroy's proposals.

Article 10. No discussion.

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Article 11. His Excellency Tang Shao-yi considered that the question of railway telegraphs was an internal matter for regulation by the Chinese Government, and that this clause was therefore superfluous in the Loan Agreement—it would, however, find a place in the working agreement to be arranged with the Hong Kong Government.

Article 12. The Chinese representatives agreed that all receipts from traffic should be deposited in the Hong Kong and Shanghai Bank, but His Excellency T l'ang Shao-yi claimed that the usual market rate of interest on the daily balance should be allowed, as in the case of other Chinese Government railways; -also, that in the event of large accumulations of profits, the Chinese Government should dis- pose of the same in the manner as those of the Northern Railways. Mr. Bland undertook to obtain the views of the bank in the matter, suggesting at the same time, that the procedure adopted for the Shanghai-Nanking Railway should be followed.

Article 13. No discussion,

Article 14. His Excellency T'ang Shao-yi stated that the Chinese Government would henceforward charge all railway construction with the proper amounts pay- able for duty and lekin this also being a purely Government question. No taxes or stamp fees would be imposed on the interest or revenues of the line. The question of lekin on goods carried by the railway was a matter for arrangement under the working agreement.

Article 15. Agreed that the Hong Kong and Shanghai Bank's commission of per cent. is payable on all sums disbursed by the bank on account of the service of the loan, during and after construction. His Excellency Tang Shao-yi stipu- lates, however, that in the purchase of sterling drafts to pay the half-yearly amounts due for interest and capital, the Chinese Government shall be free to buy in the open market.

Article 16. Considered by the Chinese representatives to be superfluous. Article 17. No discussion.

Article 18. A reasonable time limit to be conceded under the conditions stated, its period to be a matter for amicable arrangement between the Corporation and the Chinese Government.

Article 19. His Excellency Tang Shao-yi observed that the freight charges, &c., are matters to be regulated by the Director-General of the railway, in consultation with the Traffic Manager and Engineer-in-Chief, and that the final arrangements are a matter for discussion and inclusion under the working agreement.

Article 20. Mr. Bland pointed out that this clause, as drafted by the Viceroy, would be prejudicial to the Chinese Government's interests, inasmuch as the invest- ing public would not be likely to buy bonds under the conditions proposed. He suggested that a premium of 24 per cent. be paid on all bonds redeemed before the lapse of 25 years. This question was left open.

As regards the method of repaying the capital, Kung Taotai explained that the Viceroy's intention is to redeem the bonds in 40 drawings-one each year after the 10th year.

Article 21. Not discussed.

Articles 22 and 23. Mr. Bland pointed out that the loan agreement would not be possible in England if the Chinese text were authoritative, nor could it be signed before the issue of the sanctioning Edict.

The Canton-Viceroy's proposals having now been discussed seriatim, Mr. Bland observed that if the existing difficulties as regards price and commis- sion on materials could be met by the Chinese Government's endorsing the Canton Viceroy's fair and reasonable conditions, the conclusion of the agreement should not entail any great delay-if not, he feared the negotiations had reached a dead- lock. There were certain further points to be brought forward, arising out of the Corporation's draft agreement, but he thought it would be better to allow these to stand over until an agreement were come to on the essential conditions.

His Excellency T'ang Shao-yi hoped that the Corporation would see its way to accepting the Chinese Government's terms, ie., a loan at 961 and commission on importations from England.

The meeting then adjourned, it being understood that the Board's reply would be communicated when received.

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