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XCVI.

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

(Despatched 10.5 p.m., October 3, 1905: Received 10.45 October 3, 1905.)

p.m.,

Your telegram October 3rd. I have no information, but I suppose that the Viceroy must himself be paying the difference between the £1,100,000 which we are lending him and the six and three-quarter million dollars gold for which China is buying back the concession.--SATOW.

XCVII.

GOVERNOR, Hong Kong, to HIS BRITANNIC Majesty's ConsuL-GENERAL, Hankow. (Despatched 11:45 a.m.. October 4, 1905.)

Your telegram No. 8.

The £700,000 will be punctually remitted on the 6th of October to the Chinese Minister at New York. The further loan of £200,000 which I understand is not immediately required had better form the subject of a collateral agreement. Before entering into that agreement the Government must be satisfied that all foreign interests in the Hankow-Canton Railway will be extinguished thereby.

I have repeated this to His Britannic Majesty's Minister, Peking.-NATHAN.

XCVIII.

GOVERNOR, Hong Kong, to HIS BRITANNIC MAJESTY'S MINISTER, Peking. (Despatched 12.5 p.m., October 4, 1905.)

I have sent the following telegram to His Britannic Majesty's Consul-General at Hankow this morning :-

(Telegram No. XCVII repeated.)

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to enable him to settle with them, and £650,000 to be cabled to New York for the Chinese Minister, to whom he will telegraph on the receipt of your reply.

My telegram of yesterday, first sentence, more correctly "the £700,000 plus the value of the outstanding shares would amount to £950,000.”—SAVAGE,

CII.

GOVERNOR, Hong Kong, to HIS BRITANNIC MAJESTY'S VICE-CONSUL, Hankow. (Despatched 10.45 p.m., October 4, 1905.)

Your telegram No. 9 gives no reasons for altering arrangements which I have confirmed already four times to the Secretary of State for the Colonies, and which are in accordance with the agreement which was signed on my behalf on the 9th of September.

I am very averse to such alterations.

Cannot the Viceroy make arrangements with the Hong Kong and Shanghai Bank to avoid it?-NATHAN.

CIII.

GOVERNOR, Hong Kong, to His BRITANNIC MAJesty's Minister, Peking.

(Despatched 11.30 p.m., October 4, 1905.)

I have received to-night the following telegram from His Britannic Majesty's Vice-Consul at Hankow :-

(Telegram CI repeated.)

I have answered as follows:- (Telegram CII repeated.)

-NATHAN.

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XCIX.

GOVERNOR, Hong Kong, to SECRETARY OF STATE.

(Despatched 12.35 p.m.. October 4, 1905.)

Your telegram of 29th September. The Viceroy states that the discrepancy is due to the value of the outstanding shares, which are mostly Belgian. As I have no definite news that these will be surrendered, I have proposed dealing with them later in a collateral agreement, provided that I am satisfied that all foreign interests in the Canton-Hankow Railway will be extinguished thereby.

There are no changes in the arrangements requested in my telegram of the 7th of September.-NATHAN.

C.

HIS BRITANNIC MAJESTY'S MINISTER, Peking, to GOVERNOR, Hong Kong. (Despatched 3.30 p.m.. October 4, 1905: Received 4.25 p.m., October 4, 1905.)

I have sent the following telegram to His Britannic Majesty's Consul-General at Hankow to-day :-

"Referring to your telegram, No. 62, I do not know whether the Government of Hong Kong will be inclined to advance this further sum of money, but in any case, I see no harm in your consulting Hillier as the Repre- sentative of the British and Chinese Corporation.”

--SATOW.

CI.

His Britannic MAJESTY'S VICE-CONSUL., Hanków, to GOVERNOR, Hong Kong. (Despatched 1 p.m., October 4, 1905: Received 6.46 p.m., October 4, 1905.) (No. 9.)

I have been requested by an urgent message from the Viceroy to ask you to cause £450,000 to be transferiod to the Hong Kong and Shanghai Bank here so as

CIV.

Secretary of State to Governor, Hong Kong.

(Despatched 6.30 p.m., October 4, 1905: Received 6.6 a.m., October 5, 1905.)

Your telegram of the 4th of October. I concur in the course you propose.- LYTTELTON.

CV.

HIS BRITANNIC MAJESTY'S CONSUL-GENERAL, Hankow, to GOVERNOR, Hong Kong. (Despatched Kinkiang 4.14 p.m., October 5, 1905: Received 8.36 p.m., October 5, 1905.)

Referring to telegram from Hankow of the 3rd October as to resumption of Railway Loan, Viceroy's letter states that extra sum is due on coupons of bonds already sold by Railway Company and not on shares in it, and that it is as yet uncertain whether Chinese Government must redeem these coupons of bonds or whether bondholders are willing to restore to Chinese Government.-FRASER, SEAL.

CVI.

HIS BRITANNIC MAJESTY'S VICR-CONSUL, Hankow, to GOVERNOR, Hong Kong. (Despatched 2.10 p.m., October 6, 1905: Received 3.46 p.m., October 6, 1905.)

I communicated the purport of your telegram of the 4th of October to the Viceroy. He has not answered.

He did not give any reasons for disturbing existing arrangements in his urgent telegram of the 4th of October, and I was compelled by circumstances to submit bis proposal to you without consulting elsewhere.

All the information at present available is that repayment of £400,000 to the Hong Kong and Shanghai Bank here will leave a balance of £10,000 due to them by the Viceroy, and that the Chinese Minister in Washington has probably sufficient funds to cover the proposed reduction in the amount to be remitted to New York.-

SAVAGE.

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CVII.

GOVERNOR, Hong Kong, to His BRITANNIC MAJESTY'S VICE-CONSUL, Hankow.

(Despatched 4.50 p.m., October 6, 1905.)

Your telegram No. 10.

I regret that it is too late to make any alteration in allotment of the loan provided for in the agreement of the 9th of September.-NATHAN.

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SIR,

No. 162.

GOVERNOR SIR M. NATHAN to MR. LYTTELTON. (Received November 4, 1905.)

[Copy to Foreign Ofire, November 11, 1903. L.F.]

(Secret.)

Government House, Hong Kong, October 6, 1905. WITH reference to that part of my secret despatch of the 22nd September last* which dealt with negotiations for the completion of a loan agreement and a joint working agreement in connection with the proposed Canton-Kowloon Railway, I regret to have little progress to report.

2. You will doubtless have received from the Foreign Office a copy of the despatch which Sir Ernest Satow addressed to the Secretary of State for Foreign Affairs on the 21st ultimo,t covering copies of a letter in which Prince Ch'ing again expressed the desire of the Chinese to raise funds and themselves undertake the Chinese section of the line and of Sir Ernest's reply again insisting on the terms and conditions of the preliminary agreement of March 28th, 1899, being faithfully carried out.

3. The attitude of the Chinese will be made clearer to you by the extract I enclose from the issue of "The Hong Kong Daily Press of the 4th instant. It is from a letter from the newspaper's Canton correspondent, dated the 1st October, and purports to give a translation of a despatch from the Viceroy at Canton to Cheong Pat Si, alias Chang Chin Hsun (in Cantonese--Cheung Chan Fan), Director-General of Agriculture, Industry, Railways, and Mines in the Kwang Tung, Kwang-Si and Fo Kien Provinces. This despatch had previously appeared in one of the Chinese newspapers of this Colony and I have no reason to doubt its genuineness. It shows that the Chinese recognize that the railway must now be constructed, but they want to do it with funds raised by themselves, to make their own arrangements for the con. struction of the line, and to keep all property in it in their own hands.

4. This attitude gives force to the suggestion contained in the 6th paragraph of my despatch to you of the 22nd September,* on which suggestion I hope you have seen fit to act.

5. I may mention that in a conversation with Sir Paul Chater, K.C.M.G., M.L.C., this morning, in the course of which reference was made to the Canton letter in "The Hong Kong Daily Press," he suggested of his own accord that the construction of the Chinese section of the railway might be facilitated if the British and Chinese Corporation abandoned their concession, and thought it not unlikely that they would be prepared to do this on repayment of out-of-pocket expenses. Mr. C. W. Dickson, M.L.C., the present Manager of Jardine, Matheson, and Company at Hong Kong, is known to be indifferent to the concession. I have not, however, thought it advisable to discuss the matter with him, and until I know your views on the suggestion referred to in paragraph 4 above. I shall do whatever is in my power to pres on the completion of the agreements of which the drafts were received in your confidential despatch of the 17th of February, 1905.‡

6. In this connection I enclose, for your information, a copy of a letter I caused to be addressed on the 28th of September to His Britannic Majesty's Consul-General at Canton on the subject of the Viceroy there giving evidence of a desire to reciprocate the services done to him by this Government by hastening the completion of the arrange- ments for the construction of the Chinese section of the Canton-Kowloon Railway and for the joint working of that section with the one in British territory.

I have, &c.,

M. NATHAN,

Governor.

• No. 148.

† Enclosure in No. 174.

↑ No. 64.

233

Enclosure 1 in No. 162.

"DAILY PRESS," 4th October, 1905.

KOWLOON-CANTON RAILWAY.

IT is reported that Mr. James Scott, His Britannic Majesty's Consul-General at this port, has lately been pressing Viceroy Shum in respect of the building of the Kowloon-Canton Railway.

This question has been very much to the fore of late. The firm atand taken by His Excellency Sir Matthew Nathan, Governor of Hongkong, and the energetic steps taken by Consul-General Scott here, lead us to hope that the construction of this important line will be commenced at an early date. Meanwhile despatches are being exchanged on the matter.

The following is a translation of a dispatch recently sent by Viceroy Shum to His Excellency Cheong Pat Shi, Minister of Railways and Mines in China:-

"With reference to the important subject of the building of the Kowloon-Canton Railway, which the British people decided to undertake a few years ago. Sheng Sheun Wai, Minister of Railways and chief director of the railway company, and the British A draft agreement was drawn up between firm of Yee-wo (Jardine, Matheson & Co.) in the 25th year of Kwang Hau. The British people are now urging us to commence the building of this line. They desire us to raise a loan and join them in the construction of the line. I have repeatedly telegraphed to the Wai-wa-pu and also to Sheng Sheun Wai, requesting them to devise means to prevent this important railway line falling entirely into the bands of foreigners. It is absolutely necessary that the funds required for construction work should be raised by the Chinese themselves, in order to secure the right of control on the railway. Many telegrams have been exchanged between us on this matter. A demarcation of the boundary

line of the British concession in Kowloon has already been decided upon and the British people will only build that section of the line which runs through their land. The other section which runs from the Kowloon boundary to Canton must be built with funds raised in the Kwangtung Province. When both parties have completed their respective lines they will be linked together. I have received a telegram from the Wai-wu-pu, stating that they have communicated the matter to Sheng Sheun Wai and that he has been requested to discuss the matter in earnest with the British Minister in Peking. The telegram also authorizes me to hold firmly to the view I have taken in this matter and to enter minutely into the details of the affair with the British Consul. From enquiries made I have discovered that the Kowloon-Canton railway is a very important undertaking and no matter how the line is to be constructed, the funds required for its construction must be raised by ourselves so that we may not lose our right of control. The distance from Canton to the Kowloon boundary is about 110 English miles. The money required for land purchases and construction work will amount. to a huge sum. Unfortunately the provincial coffer is far from overflowing and it is almost impossible for the Government to find the enormous sum necessary. gentry and merchants for assistance in the matter by requesting them to float a company for the We shall be compelled to call upon the carrying out of the scheme and thus save appearances. The high reputation which Your Excellency has always held leads the gentry and merchants of the Kwangtung Province to look to you for assistance. You have orders, moreover, to superintend railway and mining matters in Fokien and Kwangtung and the task of forming a company is an easier matter for you on account of your high position and great power. I have, therefore, communicate this matter to you that you may enquire into the details of this affair, find out the cost of the work and devise means for the formation of a company to raise the funds necessary to carry the scheme through successfully and to report same to me."

SIR,

(No. 204.)

Enclosure 2 in No. 162.

Colonial Secretary's Office, Hong Kong, September 28, 1905. I HAVE the honour to acknowledge the receipt of your letter, No. 190, dated the 26th September, forwarding a copy and translation of a communication from the Viceroy on the subject of the renewal of the Proclamation, issued in Hong Kong under the Military Stores (Prohibition of Exportation) Ordinance, 1802, of which the operation ceases on the 27th November next.

2. I am directed to inform you that to meet the wishes of the Viceroy the Governor will propose to his Council to renew the Proclamation for a further period of six months before the expiration of which the matter can be again considered.

3. The Governor takes note of the Viceroy's recognition of the assistance given and wishes you to assure the Viceroy that it is his desire to continue the co-operation which lies within the power of his Government in matters tending to preserve the peace of the provinces under the Viceroy's jurisdiction, the punishment of wrong doers that may escape from them and the prevention of Hong Kong being made in any sense a hase for operations designed to disturb the Government of those provinces.

4. The Governor looks forward to receiving some evidence of a desire of the Viceroy to reciprocate the services done to him. In this connection I am to ask you to again bring to the notice of the Viceroy, Sir Matthew Nathan's strong desire that the arrangements for the construction of the Chinese section of the Canton-Kowloon

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