CO882-6 — Page 527

PUBLIC RECORD

OFFICE

חזן זייד

Reference :-

C.O. 882

6 PUBLIC RECORD OFFICE. LONDON

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

24

The counter proposal having been considered by the Directors of the Corporation the observations they had to make were embodied in the accompanying Memoran- dum, a copy of which I submitted personally to, and left with, Sir Matthew Nathan and Mr. Lucas on the 31st ultimo.

It will be seen from this Memorandum that the principle of your counter pro- posal is viewed favourably by the Directors of the Corporation, and that on receiving an expression of your concurrence to their so doing, they will proceed to negotiate with the Chinese Authorities for a 'Final Agreement" for the issue of a Chinese Railway Loan to construct that portion of the railway which will be in Chinese terri- tory. The Agreement will necessarily be on the lines of the Shanghai-Nanking Railway Loan Final Agreement with such modifications as are required to meet the different conditions, and include provision for the incorporation in the system of working of that part of the railway which will be in British territory, and which will be constructed by the Government of Hong Kong, such incorporation to be under an arrangement which will admit of the two portions of the railway, although separ- ately owned, being worked as one undertaking.

1

The draft Agreement and scheme will be submitted to you before being pre- sented to the Chinese Authorities.

I am, &c..

Enclosure in No. 21.

W. KESWICK,

Chairman.

THE BRITISH AND CHINESE CORPORATION, LIMITED. Memorandum respecting Canton to Hong Kong Railway.

Being invited by the Colonial Office to make a proposal, the British and Chinese Corporation suggested that they, the Corporation, should form a British Company to hold a concession from the Colonial Government of Hong Kong to construct and work the Colonial portion of the railway and to hold a concession from the Chinese to construct and work the Chinese portion of the Railway, the concession of the Chinese portion being given in exchange for the surrender of the present (guaranteed) Loan Agreement held from the Chinese by the Corporation. The proposal further suggested that it would be necessary for the Colonial Government to guarantee interest on the capital of the company holding the two concessions.

The Colonial Office replied that they were not prepared to give such a guarantee and previously they expressed the opinion that the Corporation should seriously consider before surrendering the (guaranteed) Loan Agreement which the Corpora- tion holds from the Chinese Government.

The Colonial Office added that they were prepared to finance and construct their portion of the railway and then lease it to the British and Chinese Corporation upon terms to be arranged.

The consequential position is as follows:-

(1.) The Corporation must float a guaranteed Chinese Loan for the construction of the railway from Canton to the Kowloon frontier.

(2.) To make the communication through to Hong Kong the Colonial Railway must be in some way associated with the Chinese Railway, by direct Agreement with the Chinese, or through the British and Chinese Corporation.

(3.). The association of the Colonial Railway with the Chinese Railway should be made dependent upon the Chinese Government agreeing to such managing arrangements as will ensure the railway being worked to the best advantage; for instance: The Board of Commissioners appointed to manage the railway, and which under present conditions would consist of three Europeans, including the Chief Engineer, and two Chinese, should be strengthened by, say, two nominees of the Colonial Government, and the Board of Commissioners should be made absolutely free to manage the line to the best advantage, and according to the Agreements entered into, without any interference from the Chinese Railway Administration unless they should be acting ultra vires.

(4.) Both sections of the railway should be managed and worked as though they were one line, the revenue being divided between the Chinese Government and the Colonia! Government according to mileage or such other arrangement as may be found best on investigation.

25

(5.) The term association has been used in the foregoing statement to imply a working arrangement which will admit of the two lines being worked as one under- taking, while preserving the nationality of each section, and if the Colonial Govern- ment are agreeable to such association on the general principles specified herein, negotiations might be commenced with the Chinese Government by the British and Chinese Corporation with the advice and support of the Colonial Government for the Final Agreement for the Chinese Loan to be floated after the issue which is shortly contemplated of the Shanghai-Nanking Railway Loan.

May 31, 1904.

20932

No. 22.

FOREIGN OFFICE to COLONIAL OFFICE. (Received June 14, 1904.)

The Under-Secretary of State for Foreign Affairs presents his compliments to the Under-Secretary of State for the Colonies, and is directed by the Secretary of State for Foreign Affairs to transmit, to be laid before the Secretary of State for the Colonies, copy of a paper relating to the status of the American-China Development Company, which is constructing the Hankow-Canton Railway. Foreign Office,

June 13, 1904.

(No. 104.) MY LORD,

Enclosure in No. 22.

British Embassy, Washington, May 24, 1904.

I HAVE the honour to transmit to Your Lordship herewith an extract from the New York "Sun," of yesterday's date, containing the substance of an opinion given by the Attorney-General of the United States regarding the status of the American- China Development Company,

The Marquess of Lansdowne, K.G., &e.,

&c.,

&c.

I have, &c.,

H. M. DURAND.

Extract from the "NEW YORK SUN", of 23rd May, 1904.

RUSSIA CANNOT GET CONTROL.

IMPORTANT ACTION TAKEN BY THIS GOVERNMENT.

CONSTRUCTING

IT RECOGNISES THE AMERICAN-CHINA DEVELOPMENT COMPANY WHICH IS

THE CANTON-HANKOW RAILROAD, TO BE IN GOOD FAITH AN AMERICAN COMPANY. Washington, May 22.-The great importance of the action of the United States Government in recognizing the American-China Development Company as a bona fide American concern, notwith- standing the fact that a majority of the stockholders are Belgians, is shown in the text of a part of the correspondence between the State Department and the Chinese Minister, just made public.

For nearly a month the Chinese Minister has been assisted in his efforts by a special commis. sioner from China, John F. Ferguson, grand secretary of the Imperial Chinese Railway Administra- tion of that country. Mr. Ferguson's discussion of the subject with Secretary Hay showed that China has feared for some time that Russla might soquire control of the American-China Develop- ment Company through either Belgian or French capitalists, and thus secure the proposed railway north from Canton and through the Yangtse Valley to Hankow.

It became highly important to know if the United States would maintain the exclusive right to deal with all diplomatic matters affecting the interests of the company, and now that such an assurance has been obtained the Chinese officials feel that the United States will be one of its strongest protectors should the dismemberment of China be proposed.

18885

D