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PUBLIC RECORD OFFICE

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PUBLIC RECORD OFFICE, LONDON

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Such a rauway would traverse the new territories and would hasten the develop- ment of that district which, without the assistance of light railways or other means of rapid communication, will remain in its present position of an encumbrance rather than a source of profit to the old Colony.

With the establishment of communication by railway large areas, especially in the portions of the new territory contiguous to old Kowloon, at present of small value, would become of great value, and the remoter portions of the new territories situated on the mainland, which, without railway communication can never be an appreciable source of revenue to the Colony, would be largely enhanced in value.

5. There is no more important factor, then, in the development of this Colony than that of railway communication with Canton and the trunk line to Hankow, and as far as the purely commercial interests of the Colony are concerned, it does not much matter whether the railway is constructed by an American or by a British syndicate.

The latter, however, hold the concession to build the line, and I would venture to suggest that pressure should be brought to bear on the British and Chinese Corporation, whose Chairman is Mr. William Keswick, M.P., and whose agents in London are the Hong Kong and Shanghai Banking Corporation, to begin the building of the line.

6. While the gentlemen belonging to the American Company I have mentioned were busy impressing upon me the desirability of railway connection between Hong Kong and their trunk line, I, on my part, used my best endeavours to ascertain the truth or otherwise of certain rumours current in the Colony to the effect that the Belgian holdings of shares in the American China Development Company were, as in the case of the shares in the Peking-Hankow Railway Syndicate, in reality holdings on behalf of the Russian Government, and that large numbers of the shares in the Corporation mentioned, originally held by Americans, had been purchased on the New York Stock Exchange on behalf of Russia.

I have been assured on very good authority that in both the Syndicate and Com- pany referred to, the Belgian holdings are really Russian holdings. On the other hand, Mr. Brice, the Secretary of the Company, states that as far as his Company is concerned, such is not the case, and that the report as to Russian purchases of American shares in the Company is without foundation.

7. Wherever the truth may lie, one fact is, I think, certain.

It is that money for the building of the Hankow Canton line is difficult to obtain at the present time in America, where, owing to large losses in recent financial speculations, money is tight.

And this fact tempts me to make the suggestion, though it be in a matter not strictly within my province, that His Majesty's Government would do well to acquire a substantial interest in the Hankow-Canton Railway, besides pushing the con- struction of the connecting link between the latter place and this Colony. It requires no great prescience to foresee that unless the system of Chinese Government under- goes radical reform, this Colony will. in course of years, comprise a much larger portion of the neighbouring Empire than it has already absorbed.

This Colony is in its infancy, and it were well to take, while opportunity still offers, every step that forethough can suggest to keep the way open for that development which must be far-reaching if it is not strangled by foreign competition.

1912

(No. 577.) SIR,

I have, &c.,

F. H. MAY, ~

Officer Administering the Government.

No. 2.

Acting GOVERNOR MAY to MR. LYTTELTON. (Received January 18, 1904.)

Government House, Hong Kong, December 17, 1903.

I HAVE the honour to transmit, for your information, the enclosed copy of a letter from the Hong Kong branch to the China Association in London, on the desirability of conserving and protecting British interests in South China by the

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opening of Waichow, on the East River, to foreign trade, and the necessity of imme- diately proceeding with the construction of the Kowloon-Canton Railway, with a branch to Waichow.

2. I am in entire sympathy with these projects, and concur in the opinion of the writers of the letter that their realisation is of pressing importance to this Colony and to the interests of Great Britain in the Far East. The opening of the port of Waichow is provided for in Section 12 of Article VIII. of the recent Commercial Treaty between Great Britain and China, and it is most desirable that, if possible, this portion of the treaty should be carried into effect with the least possible delay. The question of the construction of the proposed railway is understood to depend upon the steps taken by the Syndicate, who have long held the necessary concession; and I venture to hope that His Majesty's Government will use its influence to bring about a practical issue in the near Tuture.

I have, &c.,

F. H. MAY, Officer Administering the Government.

Enclosure in No. 2.

DEAR SIR,

Hong Kong, December 12, 1903. REFERRING to my letter of the 4th instant on the question of the opening of Waichow to foreign trade as a treaty port, I now beg to lay the views of my Committee thereon before you at length.

Some particulars concerning this large and populous city may not be out of place. It is situated on the East River directly north of the new territory, or Kowloon Hinterland, and is connected with the shores of Mirs Bay by (for China) a good and fairly straight footpath, through a country free from natural obstacles. The Waichow prefecture contains an industrious and flourishing population, and the soil is rich and productive. A tributary of the East River divides the city from another busy town, called Kweishin. Waichow is not accessible by water except by small native craft, the East River at that point being swift and shallow. At present, therefore, the communication with this thriving and populous district is circuitous and tedious. Its value to Hong Kong would be very great if brought within easy access, as it would lead to a development of trade and a probable increase in the labour supply of the Colony, a matter of some moment.

It is therefore eminently desirable that the opening of Waichow to British trade should not be deferred until the doubtful period of the general acceptance by the Treaty Powers of the Provisions of Article VIII. of the Mackay Treaty; and the Committee will be glad if you will be good enough to represent to the Foreign Office the importance to the Colony of Hong Kong and to British trade of pressing the Chinese Government to agree to this stipulation of the treaty being carried into effect simultaneously with the opening of Kongmoon.

Inseparably connected with this question of opening Waichow to foreign trade, as I hope presently to show, is the larger and more important one of the immediate construction of the long-projected Kowloon-Canton Railway. It is universally felt in this Colony, and by all the British residents in Canton, that it is of the highest importance to British interests that this line should be completed before the Hankow- Canton section of the great trunk railway of China is constructed. The latter is now being actively prosecuted by the American-Belgian Syndicate, to whom the con- cession was granted; but up to the present moment the. British Syndicate, who obtained the right to continue the line from Canton to Kowloon, have given no sign of activity in connection therewith. The Committee feel strongly that the interests both of this Colony and of British trade are being endangered by this delay, and that British prestige is also suffering from the apparent want of enterprise on the part of the British Syndicate. There is, moreover, in the background a further but no less real danger, to which the late Governor of Hong Kong (Sir Henry Blake) forcibly alluded in his farewell speech to the community, on the eve of his departure for Ceylon on the 20th ultimo. After referring to the sanitary progress of the Colony, His Excellency said: "But great as is the importance of the structural improvement of Hong Kong, there is a matter of greater and more pressing moment

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