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PUBLIC RECORD OFFICE

Reference :-

BRITTIC.O. 882

6

PUBLIC RECORD OFFICE, LONDON

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

Enclosures 10 (p. 33, and 11 (p. 34).

Enclosure 12 (p. 35).

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I was informed by the Chinese Authorities when I was at Chinan and when travelling through the Province of Shantung that the Chinese are not well-treated at Kiaochou, and this information was confirmed by Chinese residents who com- plained that, though the Governor had always shown himself ready to treat the Chinese well, the subordinates of the Government did not act in accordance with his wishes.

An American visitor to Kiaochou, who has travelled much, writes to me as follows:-

"I formed a very mean opinion of the Germans who were tormenting the

natives, pretending to give them civilised administration."

The Police are said to be corrupt and ever ready to take the law into their own hands.

Chinese of all classes are made to carry a light at night-an antiquated regu- lation once in force in Hong Kong-but abolished many years ago. It is supposed to be a protection against had characters, whilst it really facilitates their move-

ments.

A Chinese paper is published weekly at Tsing tao, but the proofs have to be submitted to the authorities for approval before the paper can be issued to the public.

}

A large hospital, containing 280 beds, has been built for Europeans. When we visited it, there were 120 patients in hospital, 65 of whom were suffering from venereal. There is also a hospital for Chinese erected out of funds left by the late Dr. Faber, a missionary whose name is well known in China.

A Government school for European boys has been established, whilst European girls are educated at the Catholic Convent by sisters belonging to the Franciscan Order.

There are also schools under the supervision of Catholic and Protestant Mis- sionaries in which Chinese are educated.

Much excellent afforestation work has been done. Most of the hills have been or are being planted with trees. I was informed that £5,000 a year is expended on afforestation.

The town of Tsing tao is well laid out with wide streets, and possesses some handsome buildings. A quarter has been specially built and set apart for Chinese.

Extensive harbour works are being carried on so as to afford shelter to steamers of the deepest draught in all states of the weather. The harbour, when completed, will cover about 800 acres. The estimated cost of the work is £1,600,000. It is to be finished in 1906, but the wharves for coaling will be ready at the end of this

year.

Opinions regarding the trade of Kiaochou vary. The head of the firm of Messrs. Arnhold, Karberg & Co., told me that his firm was not making any money and he was not optimistic regarding the future. Another German informed me that the present import trade at Kiaochou was chiefly made up of goods imported for Government contracts, and that when those contracts are ended the import trade will also cease. A third German merchant, long resident in Hong Kong, when asked why he did not move his headquarters to Kiaochou, responded: "I do not think the place can be good for trade, as I can only buy land there on the con- dition that the Government can resume it at any time for the same price at which I originally bought it."

On the other hand Mr. Ohlmer, the Commissioner of Chinese Customs, stationed at Kiaochou, who kindly furnished me with the two documents, of which copies are attached, states that the port is prospering and that the future is full of promise. I also attach a report, obtained for me through Mr. Addis, Sub-Manager of the Hong Kong Bank at Shanghai, which gives a favourable account of trade pro- spects at Kiaochou.

It will be observed that at present the trade is chiefly an import trade, but that it is anticipated that exports will gradually increase.

In this connection I have been informed by a British merchant at Chefoo that this year the yellow silk produced in the Province will not be forwarded as usual to Chefoo, the silk dealers stating that they will only send it to Chefoo on order and not as a speculation as formerly, because it is cheaper for them to transport it to Shanghai, which is the market for it, by the German railway than by way of Chefoo.

There was a falling off in the imports into Chefoo in 1902 as compared with

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1901, which may be partly due to the facilities of transport afforded by the German railway.

It seems fairly probable that unless the Chinese improve the communications both by land and water between the trade centres of the Province and Chefoo, that port will lose much of its present trade, and that Kiaochou, by aid of the railway, will attract to it the internal trade of Shantung.

The railway has already reached Ch'ing Chou Fu in the heart of the Province, and before long the line will be finished as far as Chinan, so that it will tap that portion of the province which has hitherto supplied its wants from Chefoo and made that port the outlet for its exports.

If more regular and frequent steam communication were established between Chefoo and Yang chiao Kon at the entrance to the Hsiao Ch'ing Ho, the former port should have no difficulty in being able to retain the lion's share of the gulf trade by inland waters steamers.

As regards the prospect of trade at Wei-hai-wei, it is useless to attempt to blink at the fact that with Kiaochou on one side and Chefoo on the other, and in the absence of railway communication with the interior of the Province, it will not be an easy task to attract Chinese trade to this territory. But Wei-hai-wei possesses natural advantages in the shape of an excellent harbour, charges no duties, and is more conveniently situated than Chefoo for certain articles of trade which now have their centre at that port. It is also under the British flag, under which the Chinese know they will be treated justly. I am not, therefore, without hope that, though handicapped as Wei-hai-wei now undoubtedly is, it may yet become possessed of a trade. If it were connected with the interior of Shantung by railway, I am inclined to believe it would be able at least to compete successfully with both Kiaochou and Chefoo, and I should be glad to hear that some other Power was willing to construct such a railway, which an understanding with Germany prevents Britishers from building.

The Germans are looking forward with hopeful anticipations to the supply of coal from the mines at Weihsien.

Mr. Ohlmer in his report attached (Enclosure 10) states that the output in 1902 was 3,300 tons, the daily output at the end of the year being 55 tons, which it is hoped will be increased to 200 tons. As to the quality of the coal Mr. Ohlmer writes to me as follows:-

"Only five lots have been so far delivered to ships for trial-merchant steamers and men-of-war. The report is that for ordinary steaming it is good-better than Japan coal, but for forced draught it has not been a success. On the other hand the naval workshop at Tsingtao is fully satisfied and burns nothing else. I have carefully tried it myself during the winter, and I consider it for house use much superior to Japanese coal. So far the supply is limited, and the coal cannot always be got."

The policy adopted at Kiaochou is exactly the opposite of that usually followed by our country. Germany's is a forcing policy; ours a waiting policy. There can be no doubt which policy is the safer and, to judge from our Colonies, the more successful. However prosperous Kiaochou may become, it will be some time before the home country can get any return on the large expenditure that has been, and is now being, incurred.

As administrators of a population chiefly oriental, I am of opinion that the Germans will never succeed. They are very ignorant of the Chinese and do not appear to know how to govern them.

By their treatment of the Chinese in their own leased territory and throughout the Province of Shantung, the Germans have created a feeling of animosity with which sooner or later they will have to reckon. Several missionaries in the province informed me that the Chinese now differentiate between foreigners, as they never did before, the Germans being hated with an intense hatred.

The Chinese officials and people in the province seem to realise that the aim of Germany is to dominate Shantung, and they have already had many disagreeable

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