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PUBLIC RECORD OFFICE

Reference :~~

THETIC.O. 882

استبسلسلسا

PUBLIC RECORD OFFICE, LONDON

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

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I trust there has been no leakage at your end. Can you find out grounds for statement about £3,000,000?

24755/S

XV.

GOVERNOR, Hong Kong, to SECRETary of State.

(July 15, 1905.)

Your telegram, 14th July. Besides redemption loan of £1,100,000, regarding which negotiations on lines approved by me are being carried on, Satow, on 10th instant, informed me that £3,000,000 in instalments of half and one million would be required for construction, and that the Viceroy at Wuchang desired to borrow this from British financiers.

Satow also asked me for suggestions regarding this, adding that it was most desirable to keep the loan entirely British, and that the connection of the Hong Kong and Shanghai Bank with German finances made this difficult.

On July 11th I replied as follows:—

"Regarding £3,000,000 loan, Government of Hong Kong cannot do this as well as loan of £1,100,000, and except the Hong Kong and Shanghai. Bank, which, for reasons you give I cannot consult, there are no financiers here that I can approach. It ought not to be difficult to borrow the money at 44 per cent. from financiers in England, and should you agree I will communicate the information given to me by you to the Secretary of State for the Colonies, and ask his aid in the matter."

I have heard nothing further from Satow since then. There has been no leakage here.

XVI.

HIS BRITANNIC MAJESTY'S MINISTER, Peking, to GOVERNOR, Hong Kong.

(July 15, 1905.).

My telegram, July 10. Following from Consul-General Hankow :--

"Viceroy prefers not to bind himself with regard to Chief Engineer (whose engagement, I think, might be a condition of the Railway Construction Loan). Viceroy hopes to obtain material and equipment almost entirely from the Hanyang Nickel Iron Works, of the regeneration of which I notified you in my despatch, No. 36. Locomotives must be bought, and in this and all other matters of railway equipment and employés he says he will turn to lenders of money first, though as a copy of his written assurance must go to Canton Changsha, whose secrecy he doubts, he hopes that document need only state that British shall have the option of supplying all the capital and half the engineers required. His reason is fear of the French and Germans.

Viceroy thinks it useless to ask the Viceroy, Canton, to include Kwangsi, as that province will not be touched by the line, but he will Kwang Tung. Telegram from Canton informs the Viceroy that Canton Viceroy only knows about the railway in so far as it is referred to in the Kowloon Extension Agreement of 1898. Viceroy yesterday expressed to me his inability to advise Canton to give assurance in a matter of which both Viceroys are ignorant, but promised his assistance as soon as he should be satisfied as to the fairness of the terms of the agreements. On July 9th Viceroy emphasised such agreement per- taining specially to Sheng, but I think drafts to Canton would have goort effect."

I have replied as follows :-

"Your telegram, No. 36. In view of what Viceroy says I agree to written assurance only containing British option of supplying all the capital

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and half the engineers. Though Chief Engineer is important and questions of material equipment less so, I leave these to you, relying on your arrangements being the best possible. Kwangsi may be excluded, Kwang Tung must be included."

Your telegram, July 11th. English draft agreements and all necessary informa- tion should be sent to His Britannic Majesty's Consul-General for confidential com- munication to Viceroy. £3,000,000 loan. Owing to anxiety of Viceroy railway construction loan to be signed after yours. Fraser informed agents of Hong Kong and Shanghai Bank and the Chartered Bank that British financiers would have first option in raising this sum, which would shortly be required. Viceroy wants it at 4 per cent., but he does not propose to convey such control over the railway as in the case of the Pehan Railway (he says he has other security than the line to pledge), so I am afraid the banks may not be able to do the loan. Please communicate as you suggest in the last sentence of your telegram of July 11th.

XVII.

HIS BRITANNIC MAJESTY'S MINISTER, Peking, to GOVERNOR, Hong Kong. (July 15, 1905.)

My immediately preceding telegram. Following from Consul, Hankow :—-

"Viceroy has sent the following message. He takes the Viceroy, Canton's, reply, which I mentioned in my last telegram, to mean that the Canton- Kowloon Railway differs from the Canton-Hankow Railway business. The Chinese construction is certainly capable of this reading. He is willing to give his friendly consideration and advice on the summary of agreements which you are sending, but asks me to point out that his American Agreement must be signed early in August, and he cannot risk that the provisional sum payable under it should depend on agree- ments regarding a matter in which he has no official standing being concluded before a certain date by persons over whom he has no control. Should this condition remain unaltered, he will be compelled to negotiate elsewhere, for the Loan Agreement must precede the American. I replied that I hoped the terms of the agreements would appear so fair that there would be no longer fear of delay in their completion; but the Private Secretary was impressed with the insist- ance of the Viceroy on this.

Private. I think the present condition would necessitate reference to the agreements in the Loan Agreement, and that the Viceroy, Wuchang, relied on the Japanese readiness to accept his terms.".

I have replied as follows:-

Your telegram, No. 37. I think we should await the attitude of the Viceroy, Canton, after the communication of the draft agreements to him.”

If, in order to prevent the matter slipping entirely from our hands it should be advisable to alter condition relative to Canton-Kowloon Railway, have you any suggestion to make likely to be acceptable to both the Hong Kong Government and the two Viceroys?

24997/S

XVIII

GOVERNOR, Hong Kong, to SECRETARY OF STATE. My telegram of July 15th. With reference to £3,000,000 loan for construction, the following is an extract from a telegram just received from Satow :--

"Owing to anxiety of the Viceroy, railway construction loan to be signed after yours. Fraser informed the Agents of the Hong Kong and Shanghai Bank and the Chartered Bank that British financiers would have first option in raising this sum, which would shortly be required. Viceroy wants it at 4 per cent., but he does not propose to convey such control over the railway as in the case of the Pehan Railway (he says