CO882-6 — Page 525

PUBLIC RECORD OFFICE

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C.O. 882

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PUBLIC RECORD OFFICE, LONDON

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Waichow, that is a thing that I hope the committee will always bear in mind and, if the railway is brought into the field of practical politica, will press for. (Applause.) It seems from all accounts to be necessary as a link in the railway between Kowloon and Canton, which if taken in the way the committee recommend would not interfere with the great interests we have in our steamers on the waterway, and would render it impossible for anybody else to develop any port on the banks of the river against this port. (Applause.) I was very pleased to see that the committee in their letter of 12th December quoted the weighty words which Sir Henry Blake gave on his going away on this subject, and I am very glad to see that the Officer Administering the Government (page 25 of this report) has taken the matter specially under his control; at least he has brought all the influence he has got to bear on that point. I think we are not unduly sanguiue when we think that with all these different influences brought to bear on it, this railway will be made to go ahead by some means or other. (Applause.) Well, gentlemen, after reading these letters I felt that the committee were fortunate in having their views put forward in such a thoughtful and lucid way as the Chairman has done. With regard to the accounts we are in a very happy position; money is coming in and very little going out. The account is mostly on one side. I have no doubt that as our balance increases we will find some useful means of utilising it. (Applause.) With these femarka, I have very much pleasure in seconding the adoption of the reports and accounts.

The motion was carried unanimously.

15912

SIR,

No. 16.

MR G. TURNER to COLONIAL OFFICE.

(Received May 5, 1904.)

[Acknowledged by No. 18.]

300, Langside Road, Glasgow, May 3, 1904. I BEC to draw your attention to the contents of a telegram which appeared in "The Times," of Friday last, on page 3, and was headed "The Hong Kong-Canton Railway."

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The railway referred to forms one of a group of four concessions which were granted by the Imperial Chinese Government six years ago to the British and Chinese Corporation, Limited, per their agents in China and Hong Kong, Messrs. Jardine, Matheson and Company. None of these have been proceeded with, for the reason that the proceeds of the previous loan, which was raised over five years ago for the Newchwang extension, have not been disbursed with such impartiality as to inspire the confidence of investors and lead them to subscribe for new issues. As an instance, I may say that the North China Railway debts of 1st March, 1899, remain unpaid, though the creditors are British subjects, and ample funds remain at the credit of this Railway Administration Account in London.

From the contents of the cablegram referred to, it would appear that these contractors hope to secure the co-operation of the Hong Kong Government Council, and His Majesty's Government in London, and thus raise themselves above, and be independent of, investors, and defy the old creditors of the North China Railway. On the 9th of March these same parties failed to provide and pay the money required for the construction of the Shanghai-Nanking Railway, for which they had given a new contract eight months before. The enclosed newspaper cutting explains the position.

I understand that the firm who are agents at Hong Kong for the above Corpora- tion have two partners who are members of the Hong Kong Legislature (viz.. Messrs. J. J. Keswick and J. Bell Irving), and these are also prominent members of the Chamber of Commerce there. The cablegram referred to is said to have been inspired by these gentlemen, and sent in the interests of their firm.

The matter is one which I have thought proper should be brought under your personal notice.

I have the honour to be,

The Honourable

Alfred Lyttelton, M.A., K.C.,

His Majesty's Colonial Office.

Yours, &c.,

GEORGE TURNER.

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Enclosure in No. 18.

CHINESE RAILWAY CONCESSIONS.

It was announced in the House of Commons on the 28th March by the Under-Secretary of State for Foreign Affairs that the negotiations which had previously been going on between the concee- sionaires of the Shanghai-Nauking Railway and the Chinese Board of Commissioners, with the view to the early flotation of the loan and commencement of construction, had been broken off, and a postponement of the issue resolved on till after peace is restored. In this advantage was taken of a clause, said to have been in the agreement, to the effect that such might take place in the event of an unfavourable condition of the Money Market resulting from an outbreak of war. During the six years in which this concession has been in force it should be noted that there was perfect peace for the first two years, followed by the Boxer troubles, which lasted about one year, while over the last two or three years a state of peace has again reigned, so much so that advantage was largely taken to raise money in France and Germany for investment in Chinese enterprises. The present state of war, however, it is apparent, is not the cause of the non-issue of the intended loan. Before the beginning of February last, when hostilities commenced between Russia and Japan, the corporation for several months had put forward as the cause of their inability to raise the required capital the lack of a British Government guarantee to the bonds to be issued. To this it was replied that such was not required in February, 1899, when it issued the North China Railway-Newchwang Extension bonds, nor did French and German concessionaires receive such support from their respective Governments; and yet these had found enormous sums without difficulty (mid to be about £20,000,000) within these six years.

Thus see-saw arguments have been used-in time of peace we have been given one reason, and In time of war we are asked to accept another. One thing, however, is patent and ought to be clearly kept in view-namely, the real cause, whatever it is, has existed continuously over six years, or nearly so. Neither of the causes adduced by the corporation conform to this. We must, there- fore look elsewhere for the real cause. There must be something the effect of which has been conter- minous, or nearly so, with the existence of the concession itself. It ought to be found at a point aubsequent to the very successful issue of the Newchwang Extension bonds in February, 1899, and prior to December of that year, when these same bonds of the corporation fell to £81 net and from which they have never permanently recovered their stability. When the parties interested have ascertained the real cause, and recognised the same as the essential factor in the situation, some progress may be looked for.

As this concession was obtained only by means of the assistance rendered by His Majesty's Government, it would be interesting to know if it has fully satisfied itself that all difficulties are now removed, and nothing further is necessary to secure a successful issue of the bonds but the cessation of hostilities between the present belligerents. Should this be the view of the Government it need hardly be said that many well-informed people on Chinese affairs hold a very different opinion; if this is not the Government's conviction, then why not press on the interested parties the urgent necessity of at once setting their house in order and having everything in readiness for the flotation under the happiest auspices on the return of peace, should such delay be thought desirable?

13052

SIR

No. 16A.

COLONIAL OFFICE to MR. W. KESWICK, M.P. (BRITISH AND CHINESE CORPORATION, LIMITED).

[Answered by No. 21.]

Downing Street, May 8, 1904. MR. LYTTELTON has had under consideration the draft proposal" of "The British and Chinese Corporation, Limited," for a railway scheme from Kowloon to Canton, which you were good enough to leave at this office, and subsequently to discuss here with Major Sir M. Nathan, on the 14th ultimo.

2. The draft proposal contemplates the surrender to the Chinese Government of the advantages that the Corporation obtained by their agreement with that Government of the 28th March, 1899, in exchange for the grant to the Government of Hong Kong of the exclusive right to construct and work a railway from the frontier of Kowloon to Canton by means of a British Railway Company. It also contemplates that the same company receiving facilities from, the Hong Kong Government, should construct and work a continuation of the line to a terminus in British territory, and that during construction and subsequently, the Hong Kong Government should guarantee a sum sufficient to pay 3 per cent. on the full nominal amount of the Company's issued capital, receiving, in return, a moiety of net profits derived from the railway when completed. It further contemplates that

• No. 18.