CO882-6 — Page 546

| PUBLIC RECORD OFFICE

Reference :-

TEC.O. 882

6PUBLIC RECORD OFFICE, LONDON

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

62

No. 43.

MEMORANDUM BY MR. FIDDES.

·

On the receipt of the letter of the 8th July* from the British and Chinese Cor- poration, it was decided that the negotiations should be continued unofficially. Secretary of State nominated me in conjunction with Sir Cecil Smith to represent him, The and the Corporation were represented by Mr. W. Keswick, M.P., their Chairman, and Mr. C. C. Macrae, one of their Directors. We had two or three meetings, and the subject was also discussed in letters, of which I annex the most important. They should be read in connexion with my memorandum, these have been sent by mail, from time to time, to the Governor, so as to keep him in- Eastern No. 91." Copies of formed of the progress of the negotiations.

Colonial Office,

December 15, 1904.

DEAR MR. FIDDES,

Annexures to No. 43.

(1.)

LL

CANTON-KOWLOON RAILWAY.

The British and Chinese Corporation, Limited,

G. V. FIDDES.

3, Lombard Street, London, E.C., October 3, 1904.

I HAVE Considered with much care what I believe at our recent conference were the conclusions come to, that the British section and the Chinese section of the rail- way will have to be constructed by the respective Governments, that the working of both sections as one undertaking must be by an agreement between the two Govern- ments, to become operative as soon as both sections have been completed, and that the general terms of such agreement should be arranged between the Colonial Government representatives and the British and Chinese Corporation representatives before nego- tiations are opened with the Chinese Government for the introduction into the Final Loan Agreement of such modifications of the existing Preliminary Loan Agreement as may be necessary to enable the joint working agreement to be made.

It appears to me, therefore, that the next step to be taken is to arrange the terms of the working agreement to be made between the two Governments, and when this is done the British and Chinese Corporation can, with the assistance and support of the Colonial Government, proceed to negotiate for the Final Loan Agreement for the Chinese section, such agreement being on the general lines of the Shanghai-Nan- king Railway Loan Agreement modified generally to meet the different circumstances and materially to admit of the proposed joint working agreement.

The general modifications are not of inmediate moment, but to admit of the proposed joint working agreement I suggest that there be substituted for Article 23 a new article as follows:-

I'ROPOSED ARTICLE 23.

The railway shall be constructed, whether departmentally or by a Contractor or Contractors, to the specification of the Consulting Engineers to be nominated by the Corporation and appointed and paid by the Board of Commissioners; and whereas the Colonial Government of Hong Kong are about to construct a British Colonial Government railway from the Port of Hong Kong to the frontier of British Kowloon, with the object of connecting with the Chinese railway at the frontier of Kowloon, the Chinese Government hereby undertakes the ratification of this agreement to enter into an agreement in the terms of the draft set forth in the schedule hereto, with the Colonial Government of Hong Kong providing for the connection of the two railways when completed and for the working of the two railways on the joint behalf of the said Governments.

The agreement must be drafted by qualified experts, but, meanwhile, I suggest that the general conditions should be as follows:-

63

HEADS OF AGREEMENT.

1. The agreement to become operative on the completion by the two Govern- ments of their respective sections, provisions as to time, cost, and design, &c., to be inserted.

2. The Colonial Government to provide the necessary capital for working the joint railway and to provide and own the necessary rolling-stock for the same.

NOTE A-This provision is designed to facilitate the efficient working of the

line and development of traffic and avoid Chinese obstruction. NOTE B.-The right of the Corporation to a commission on materials supplied

3.

to the Chinese section during the continuance of the loan to be pro- tected.

The joint railway to be operated and controlled by a Joint Board of Manage- ment consisting of members, of which shall be appointed by the Colonial Govern- ment, by the Chinese Government, and by the British and Chinese Corporation,

the duties, powers, and remuneration of the Joint Board of Management to be speci- fied in the agreement and be subject to modification by the Chinese Government and the Colonial Government by agreement.

When all the bonds and net profit certificates have been redeemed, the right of the British and Chinese Corporation to appoint representatives on the Joint Board of Management to cease and the number of members constituting that Board to be re- duced accordingly.

4. On the agreement for the connection and working of the joint railway be- coming operative, the powers and duties of the Board of Commissioners to be con- stituted under Article 6 of the Loan Agreement to be suspended, except for the pur- pose of receiving and dealing with the share of net revenue to which the Chinese rail- way may be entitled and which, after providing for the service of the loan, shall be appropriated as provided in Article 12 of the Loan Agreement.

5. The net revenue of the joint railway to be divided half-yearly between the Colonial Government and the Chinese Government in proportion to the capital of the respective Governments employed in the construction and operation of the joint rail- way. In the event of the railway being worked at a loss, such loss shall be borne by the respective Governments in the like proportions.

6.

The agreement to be capable of modification and determination by mutual consent, but not otherwise, nor while any Chinese Government Railway Bonds and Net Profit Certificates, issued in connection with the loan to construct the Chinese section, are outstanding without the concurrence of the British and Chinese Corporation.

(Private.)

MY DEAR NATHAN,

(2.)

I am, &c.,

W. KESWICK

Colonial Office, October 28, 1904.

I ENCLOSE a memorandum,* which explains itself, on the Canton-Kowloon Rail- way Scheme. It has not yet been seen by the Secretary of State, so I cannot say if the proposals will be approved, but I send it to catch this mail as I don't want to lose time. Should Mr. Lyttelton agree, you will probably get a telegram asking you to submit objections, if you have any, by telegraph, and will not finally commit you

in the negotiations till you have had time to reply.

I think you will agree that, in view of the importance of getting the railway made,

it will be well not to raise difficulties over minor points.

We don't want anything said in public until we are able to announce that a definite stage has been reached, as we think that it would not facilitate the negotia- tions with the Chinese if they got to hear of our proposals from third parties before getting them from us.

Yours, &c.,

G. V. FIDDES.

• No. 28.

• Eastern No. 91.