CO882-6 — Page 636

PUBLIC RECORD OFFICE

Reference :-

FTPLC.O. 882

luluiludniku

6 PUBLIC RECORD OFFICE, LONDON

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repayment of the Crown Agents advances of £400,000 and £700,000. I accordingly drafted on the following morning a bill authorising me to raise, as occasion might require, sums not exceeding £2,000,000 in all, to defray the cost of a railway from Kowloon and for other railway purposes.

5. It seemed to me that it would eventually be necessary to get authority for a loan for the Hong Kong section of the Canton-Kowloon Railway, and that if this authority were obtained at the same time as that for the loan for repayment of advances made by the Crown Agents, the latter loan would be more acceptable to the Legislative Council. I accordingly added to the £1,100,000 liability already incurred a sum of £500,000, the approximate estimate for the Hong Kong section of the Canton-Kowloon Railway, contained in paragraph 20 of my confidential despatch of the 11th January, 1905.* an estimate which I have seen no reason to modify, though I note that in paragraph 5 of your confidential despatch of the 20th January last, you suggest £750,000 as a safe estimate. To the £1,600,000 obtained by adding my estimate for the Hong Kong section of the Canton-Kowloon Railway to the amount of the Crown Agents' advances on account of the redemption of the Canton-Hankow line, I added a further sum of £400,000, bringing up the total to £2,000,000, with two objects in view. First of all I wanted to be in a position, without further legislation, to meet the possible supplementary Canton- Hankow Railway Redemption Loan, referred to in paragraph 5 of my secret despatch of the 6th October. Secondly, I wanted to be able to advance money to the Viceroy at Canton to start his section of the Canton-Kowloon line, in the event of Sir Ernest Satow failing to get effect given to the 1899 Agreement with the British and Chinese Corporation, and of that Corporation surrendering their concession under the condi- tions suggested in paragraph 6 of my secret despatch of the 22nd September, 1905.§ 8. On the afternoon of Thursday, the 12th instant, I explained at a private meeting with the unofficial members of the Legislative Council the bill I had drafted, and suggested to them the advisability of it being passed without discussion. To this they agreed, and at a public meeting of the Legislative Council on the following day, certain Standing Orders having been suspended, the bill passed unanimously a first, second, and third time, and became law as Ordinance No. 11 of 1905 within a quarter of an hour of its introduction.

7. I telegraphed to you at once (CXII.) the action taken, and sent you by the French mail which left on the 17th, copies of the Ordinance, trusting that you would not see fit to advise His Majesty to disallow it.

8. In the meantime Mr. Fraser had returned to Hankow, and in a telegram of the 12th instant (CXI.) had given a further explanation of the supplementary loan required by the Viceroy of the Hu Kuang Provinces, which now amounted to £450,000.

9. I was not anxious, if it could possibly be avoided, to increase the Colony's liabilities in connection with the Canton-Hankow line, which concerns us much less than the Canton-Kowloon line, and as the Consul-General's telegram indicated the possibility of the British and Chinese Corporation, who, I understand, may raise the money for the construction of the redeemed line, also lending the money for the completion of the redemption, if terms could be arranged, I telegraphed to you, on the 13th (CXIII.), suggesting that the Corporation should be induced to lower their terms, so that they should be less than the Viceroy could get from any foreign source, adding that if this could not be done and if Sir Ernest Satow (who is in a better position than I am to ascertain the necessity for, and finality of, a further loan) advised this Government supplementing the loan they have already made, I should be prepared to do this. I informed His Britannic Majesty's Minister at Peking and His Britannic Majesty's Consul-General at Hankow (CXIV. and CXV.) what I had told you. The necessity for a further loan is being investigated by Sir Ernest Satow and Mr. Fraser (CXVI. and CXVII.), and the latter appears, from his telegram of the 16th instant (CXVIII.), which is only imperfectly under- stood by me, to be endeavouring to induce the British and Chinese Corporation, through their local agent, to make this further loan.

10. In another despatch, of even date,|| dealing with negotiations for the com- pletion of a Loan Agreement and Joint Working Agreement in connection with the Canton-Kowloon Railway. I am explaining to you how I should propose to use the balance of the £2,000,000 which I am authorised to raise by Ordinance No. 11

f No. 148.

| No. 168.

• No. 59.

† No. 53.

‡ No. 161.

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of 1905, in the event of that balance not being required for a supplementary loan in connection with the redemption of the Canton-Hankow Railway.

I have, &c.,

(35799)

Enclosure in No. 109.

CVIII.

M. NATHAN,

Governor.

GOVERNOR, Hong Kong, to SECRETARY OF STATE.

(Despatched 3.15 p.m., October 7, 1905.)

I have just heard that the conditions of the Agreement for the loan from Hong Kong to the Wuchang Viceroy, and the payment of £400,000 to the Hong Kong and Shanghai Bank were published this morning in Shanghai. In these circum- stances I propose to tell the conditions and concomitant advantages to the Executive Council confidentially, who at present do not know anything of the matter.

Do

you approve

(35799)

CIX.

SECRETARY OF State to Governor, Hong Kong.

(Despatched 6.15 p.m., October 7, 1905; Received 5.25 a.m., October 8, 1905.)

In reply to your telegram of the seventh, I approve.

(36010)

CX.

Secretary of State to GoveRNOR, Hong Kong

(Despatched 11.30 a.m., October 11, 1905; Received 10.20 p.m., October 11, 1905.)

Payments of £400,000 and £700,000 were duly made on the 6th of October. The Crown Agents ask for immediate legislation authorising the raising of a loan to repay this advance. The necessary steps should be taken at once.

CXI.

HIS BRITANNIC Majesty's ConSUL-GENERAL, Hankow, to GOVERNOR, Hong Kong. (Despatched 3 p.m., October 12, 1905; Received 8.51 p.m., October 12, 1905.)

Your telegram of 4th October. Canton-Hankow Railway bonds. I have seen the Viceroy, who begs you to make a further loan of £450,000 on identical terms, so as to enable him to redeem these bonds at two-and-a-half per cent. premium, as prescribed by the American Agreement.

The Belgian Minister, supported by the French, is making a pretext of their being left unpaid for claiming from the Chinese Government the sole right to take up the lapsed concession unless, perhaps, it is transferred to other Americans. Until this burden is cleared off the Chinese Foreign Office, therefore, strictly forbid the Viceroy to raise any foreign loan for this line, and consequently the privilege gained for our people is endangered.

The Viceroy assured me that the payment of these bonds will entirely extinguish all foreign interests in the railway in question, and that the original security is quite sufficient to cover the proposed supplementary loan.

The Viceroy will, on hearing that you agree to this proposal, give the bond- holders the four months' notice prescribed, and will leave the particulars to arrange with us later.

The British and Chinese Corporation could only lend at an issue price which would, as the Decree covers a paper currency loan only, expose the Viceroy to attack from his enemies for his failure to successfully complete the transaction.

JONAT

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