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PUBLIC RECORD OFFICE

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TLC.O. 882

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PUBLIC RECORD OFFICE, LONDON

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control over Chinese railways; foreign engineers would, of course, have to be employed, but they must be servants of China, not of foreign Corporations.

He himself entertained grave fears about the Shanghai-Nanking Railway, which he did not think could be completed under the present arrangements, indeed, he expected inside 18 months that the present régime of that railway would be entirely changed.

Mr. Ross said he regretted to hear that Mr. Wei entertained such views, which be would certainly report to his principals.

In the desultory conversation which followed, Mr. Ross asked Mr. Wen how it was proposed to raise money with which to build the Canton-Kowloon Railway. Mr. Wen replied that it would be done by means of shares, and when reminded that such shares were not very popular with his countrymen, and that a very recent attempt to raise money in this way had proved a fiasco, remarked "perhaps we can borrow from the Hong Kong Government."

The subject of the Shanghai riots was also touched upon, Mr. Wen saying that as Head of the Telegraph Department in Canton, he read all telegrams addressed to foreigners, from which source he was able to inform the meeting that everything was now quiet in Shanghai.

Questioned by Mr. Ross as to the progress being made on the Canton-Samshui line, Mr. Wen, who is Superintendent of this line, said the profits were roughly $30,000 a month; no goods were carried as they possessed no goods waggons; the line beyond Fatahan was not ballasted, but the whole line was well and most efficiently looked after by one foreigner (formerly a locomotive foreman in American employ). C. H. Ross.

Confirmed by R. J. Tebbitt, December 28, 1905.

SIR,

(No. 66.)

Enclosure 3 in No. 202.

His Majesty's Consulate-General, Canton, December 22, 1905. Canton-Kowloon Railway: Viceroy requires cancellation of Concession.

WITH reference to your telegraphic instructions with regard to the Canton- Kowloon Railway negotiations between the Viceroy and the representative of the British Chinese Corporation, I beg to report that the Viceroy expressed himself unable, on account of his health, to receive Mr. Ross, but deputed his three Secretaries to conduct the negotiations. I regret to have to state that the result of two interviews made it perfectly clear that no satisfactory arrangement could be made. The deputies, on behalf of the Viceroy, declined to recognise the original concession, or entertain any suggestion from Mr. Ross as to a loan arrangement to provide funds for the con- struction of the line. They stated that the Viceroy required the absolute cancella- tion of the concession, making what he considered a liberal offer, namely, to refund actual expenses incurred up to date.

I beg to enclose copy and translation of the Viceroy's letter communicating this decision.

&c.,

&c., &c.,

Sir Ernest Satow, G.C.M.G.,

His Majesty's Minister, Peking.

SIR,

(Translation.)

I have, &c.,

JAMES SCOTT,

Consul-General.

VICEROY to CONSUL-GENERAL.

Canton, December 20, 1905. Canton-Kowloon Railway: Viceroy requires cancellation of Concession.

IN connection with the proposal for the construction of the Canton-Kowloon Bailway, I beg to point out that Clause 5 of the Draft Agreement, concluded by Sheng,

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Director-General of Railway Administration, with the representative of Messrs. Jar- dine, Matheson, and Company and the Hong Kong and Shanghai Bank, lays down that "if, on consultation with the Viceroy the Governor of this Province, local diffi- culties be found to exist, the Agreement shall be amended accordingly": that is to say, the arrangements for the construction of the line should depend on local con- ditions. Now, several years have elapsed since the conclusion of the Agreement, and the present situation is totally different; with the result that any complaisance or compromise would only involve both parties in difficulties.

The construction of this railway was proposed with a view to the commercial advantage of both countries, and the recommendation by His Majesty's Minister in Peking that British firma should undertake the work was due to his desire that the line should be speedily completed and the transport of merchandise thereby facilitated; not in the personal interests of any individual.

As the section of the line within Kowloon territory is to be constructed by your Government, this Government will, on its part, raise funds for the construction of the section between Canton and the Chinese frontier of Kowloon: each Government to have exclusive and independent control of its own section; and I would urge that the question of British firms constructing the Chinese section be now dropped.

When both sections of the railway have been completed a joint working agree- ment can then be arranged.

As regards the salaries and expenses of the engineers employed by Messrs. Jar- dine, Matheson, and Company to survey the line, I should be glad if you would ascer- tain the amount from that firm and inform me, so that I may duly refund it, as is but fair. The plans and estimates for the line, which have been drawn up by these engineers should, however, be obtained and delivered to this Government through

you.

I have instructed Messrs. Wei, Wen and Kung to inform Mr. Ross personally to this effect; and I have now the honour to request that you will be good enough to communicate with His Majesty's Minister in Peking and the Governor of Hong Kong, as also with Mesars. Jardine, Matheson, and Company and the Hong Kong and Shanghai Bank, in the same sense.

Translated by:

P. Grant-Jones.

Enclosure 4 in No. 202.

I avail myself, &c.,

(Viceroy's Seal.)

GOVERNOR, Hong Kong, to His BRITANNIC MAJESTY'S CONSUL-GENERAL, Canton. Government House, December 26, 1905.

SIR,

I HAVE the honour to acknowledge the receipt of your letter, No. 238, dated the 23rd December, 1905, enclosing, for my information, your despatch to His Majesty's Minister, No. 66, covering a letter from the Viceroy urging that the question of British firms constructing the Chinese section of the Canton-Kowloon Railway be now dropped.

As the Viceroy requested that his views might be communicated to me, I shall be obliged by your informing His Excellency that I am unable to accept them as they cannot be supported by the Chinese Government without a breach of faith, that I am communicating with His Majesty's Minister on the subject and that so long as His Excellency preserves his present unfriendly attitude he cannot expect any co- operation or assistance from this Government.

His Britannic Majesty's Consul-General, Canton.

I have, &c.,

MATTHEW NATHAN.