CO882-(6-8) — Page 65

PUBLIC RECORD OFFICE

Reference :-

C.O. 882

f

PUBLIC RECORD OFFICE, LONDON

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

SIR,

494

Enclosure 2 in No. 318.

Peking, October 13, 1906. WITH reference to my despatch of October 5th, enclosing a copy of my despatch, No. 390, to the Foreign Office, I have the honour to enclose, for

your infor- mation, minutes of meetings held at the Wai Wu Pu on October 8th and 10th, between Mr. Bland and the Chinese negotiators of the Canton-Kowloon Railway Final Agreement, together with a copy of a draft final agreement, which was given to me last evening by Mr. Bland. This draft should be read in conjunction with the minutes.

In an earlier draft, which was submitted at the meeting of October 8th, Mr. Bland, made references to the working agreement to be concluded by Your Excel- lency with the Viceroy of Canton, and introduced a provision to the effect that the two sections of the railway should be constructed as one continuous line, without break. This form of wording was not acceptable to the Chinese negotiators, who also objected to the insertion of a definite limit of time within which negotiations for the working agreement should be commenced, and the form given in Article 18 of the enclosed draft was substituted. I do not myself see objection to this Article 18, and I trust Your Excellency will be able to accept it. As regards connection with the Canton-Hankow Railway, neither Mr. Bland nor myself consider that the Chinese negotiators would agree to include provision in the sense you desire, at any rate, in the final loan agreement. The stipulation regarding rival lines, contained in Article 17 of the printed draft, is, as you will see, embodied in Article 15 of the enclosed draft.

His Excellency

Sir M. Nathan, K.C.M.G., &c.,

&c.,

&c.

Enclosure 3 in No. 318.

CANTON-KOWLOON RAILWAY.

I have, &c.,

J. N. JORDAN.

Minutes of Meeting (the 5th) held at the Wai Wu Pu on Monday, the 8th October,

at 3 p.m. PRESENT:

His Excellency T'ang Shao-yi.

Kung Taotai and Mr. Hu, representing His Excellency the Viceroy of

Canton.

Mr. En, Secretary to the Wai Wu Pu, and

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

Limited.

Mr. Bland stated that further instructions from his Board now enabled him to make a final offer for the loan at 93 provided that the matter be promptly settled, and that the other conditions of the agreement be accepted, as stated by the Corpora- tion. In making the offer he again explained that the Canton-Kowloon Railway was regarded by the money market as a security decidedly inferior to that of the Northern Railway (now quoted at 1014), and that if any further modification affecting the security of investors were introduced, the price must suffer corresponding depreci- ation. It was impossible for the Chinese Government to expect that the Bonds for a short railway as yet unbuilt, should be on the same footing as those of a remunera- tive and extensive system, and the price suggested by Kung Ťaotai, 95, was, therefore, impossible.

His Excellency T'ang Shao-Yi stated that the Viceroy had named 95 as the price in his draft agreement, and that it would be extremely difficult for his representatives, and for the Wai Wu Pu, to conclude the loan at a lower rate. Setting the question of price aside for the time being, however, he proposed that the re-draft of the agreement, made since the last meeting by Mr. Bland, be discussed seriatim with a view to coming, if possible, to a final understanding on all other points.

Article 1. His Excellency Tang Shao-Yi took exception to the Bonds being specifically described as similar to those of the Shanghai-Nanking Railway, on the ground that the form should be a matter for arrangement in the event of there being

495

anything in the Nanking Bonds to which the Chinese Government might take excep- tion. Mr. Bland said that conditions of this kind, while without possible detriment to the interests of the Chinese Government, were absolutely necessary to inspire confidence amongst investors. He had sent to Shanghai for one of the Bonds, and hoped to be able to reassure His Excellency as to its form being unobjectionable.

Article 2. His Excellency Tang Shao-Yi objected to the wording of this article in so far as it referred to the working agreement to be hereafter negotiated between the Viceroy and the Hong Kong Government. He considered this as a matter beyond the proper scope of the present loan agreement which referred on to the Chinese section of the railway, and he therefore proposed to delete all mention of the said working agreement. Incidentally, he objected to the term as liable to create misapprehension and difficulty in the future, and stated that the Chinese Government would not bind itself to the condition that the two sections of the line should be worked as one undertaking, it being their intention to have separate frontier stations, and an independent system, under conditions similar to those existing at the Fengtai Junction of the Northern and Ching Han Railways.

Mr. Bland expressed regret that this intention had not been made clear from the outset, since the loan issue must inevitably be prejudiced if there be any doubt as to the railway being worked under reciprocal arrangements calculated to promote its earning powers. He pointed out that the working agreement had been frequently mentioned, and its eventual arrangement assumed at earlier meetings; also, that in Article 21 of the Viceroy's draft it is specifically provided for. After considerable discussion it was agreed to substitute for the clause as drafted the Viceroy's original proposal, reading as follows:-

"The junction of the sections of the railway from Canton to the boundary of the Kowloon leased territory under British control, and from the said boundary to the port of Kowloon respectively shall be arranged, and the railway worked under conditions based on the agreements usual in regard to the junction and working of inter-State railways in other countries. The Viceroy and the Governor of Hong Kong shall, in due time, appoint officials to consider the subject, and to arrange regulations accordingly."

Mr. Bland suggested the advisability of naming a date for these negotiations to commence, but His Excellency T'ang Shao-Yi considered this to be unnecessary, and outside the scope of the loan agreement.

Mr. Bland further suggested that, in accordance with the provision of the preliminary agreement it be generally stated under this article that the railway would be hereafter worked in connection with the trunk line to Hankow, a condition without detriment to China, and calculated to improve the prospects of the loan, but His Excellency was opposed to the insertion of this statement.

Article 3. Reference to the working agreement was deleted. Articles 4 and 5. Accepted without modification.

Article 6. This article was considered in detail, and eventually passed with the addition of a clause providing for the appointment of a Chinese accountant for duty in the Chief Accountant's Department.

His Excellency Shao-Yi, having another appointment, this meeting adjourned at 4.30 p.m., another meeting being arranged for Wednesday, the 10th instant, at 3.45 p.m.

Enclosure 4 in No. 318. CANTON-Kowloon Railway.

Minutes of Meeting (the 6th) held at the Wai Wu Pu on Wednesday, the 10th October, at 3.45 p.m. PRESENT:

His Excellency Tang Shao-Yi.

Kung Taotai and Mr. Hu, representing the Viceroy of Canton.

Mr. En, Secretary to the Wai Wu Pu, and

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

Limited.

Discussion of the draft agreement was renewed.