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That the boundaries mentioned in the three paragraphs last quoted included country on the Portuguese side of the modus vivendi line,

That in view of the Agreement with Portugal in 1893 it was clearly impossible for His Majesty's Government to approve of the Company acquiring rights or undertaking obligations in the sphere provisionally assigned to Portugal, while on the other hand it was important, in view of a possibility of a reference to arbitration not to take any action calculated to prejudice the claims of His Majesty's Government to a part or the whole of that sphere.

That on the advice of our predecessors in office the Company were informed in the letter of the 8th May, 1900, that a formal document would have to be prepared embodying the conditions on which you approved of the Concession. That you were disposed to think that the simplest and safest procedure would be to obtain the concurrence of the Company in a form of approval to be engrossed on the Concession. That a Draft of such a form of approval was enclosed. That in that Draft the transfer of mineral rights had been exempted from the operation of the condition which provided that the Company were not to alienate any of the privileges acquired by the Concession without the consent of His Majesty's Government. That this had been done because you thought it desirable to avoid responsibility for the formation of subsidiary companies which were likely to be constituted for the purpose of mineral development.

That Mr. Lucas was to request us to take the papers submitted into our considera. tion, and to favour you with our Report:-

(1.) Whether the endorsement of the approval of the Secretary of State on the Concession as proposed was a proper and sufficient mode of procedure?

(2.) Whether such endorsement should be made on the form of Concession marked "A" or on that marked "B"?

(3.) Whether the Draft enclosed would sufficiently carry out the intentions of the Secretary of State as explained in Mr. Lucas's letter, and in the correspondence with the Company especially with regard to the obligations of His Majesty's Government towards Portugal, and to the claims which His Majesty's Government might put forward before a Court of Arbitration, and if not, what modifications we would suggest.

In obedience to your commands we have taken the papers into our consideration, and have the honour to

1. Yes,

Report as follows :-

2. We think it would be better to endorse the approval on the form marked "B"

as it is stated that "A" contains a Clause (A) inconsistent with the Charter of the British South Africa Company.

3. We think the Draft as initialled by us will sufficiently carry out the intentions of the Secretary of State, and will not prejudice His Majesty's Government in regard to their obligations towards Portugal. The only suggestion we have to make is as to the propriety of inserting in the approval a clause embodying the undertaking given in Paragraph 7 of the Company's letter of 29th June, 1901.

We have, &c.,

29414.

No. 98.

(TRANSVAAL.)

LAW OFFICERS to FOREIGN OFFICE.

Memorandum* on the Position of Shareholders of the Netherlands South Africa Railway Company.

We are not aware of any authority for the proposition that the property of a neutral who has taken part in a war is in a more unfavourable position than that of an enemy, and in this case there is the further difficulty that the acts of hostility complained of may be said not to have been within the scope of the Director's duties and may therefore be said not to affect the shareholders in the absence of actual authority or ratification.

We are, however, far from advising that His Majesty's Government should at once admit liability to the Netherlands Railway Company. There is great force in the con- tentions put forward in the Report of the Concessions Committee, more especially if the case be looked at broadly from the point of view of any claim to equitable consideration.

There are also the questions, how far the shareholders, so far as they can be con- sidered as having become belligerents, have any claim to the intervention of their own neutral Governments on their behalf, and how far they can be made liable for the damage which the action of the Company has caused to His Majesty's Government and subjects.

As regards the shares of the Transvaal Government purchased from them after the Proclamation, it appears to us on the very general statement which alone is before us that there may be good ground for contending that the purchasers have acquired no title as against His Majesty's Government as the purchase was effected with notice of the claims of His Majesty's Government.

August 8, 1901.

R. B. F. E. C.

• Written in reply to a verbal enquiry of the Foreign Office : are F. O. 29414 01, Transvaal.

The Right Honourable J. Chamberlain, M.P.,

&c.,

&c.,

&c.

The draft is attached to 26943.

R. B. FINLAY. EDWARD CARSON.

9807-25-8 1901

Wt 358

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PUBLIC RECORD OFFICE

Reference :-

C.O. 885

15 PUBLIC RECORD OFFICE, LONDON

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