CO129-326 - Foreign Office - 1904 — Page 318

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by two Royal Engineer officers, who rode over what was thought might be the probable route to be selected.

He adds that "now that the Shanghae-Nanking final contract has been entered into, and as its terms will govern the Canton-Kowloon line, there should now be no greater delay than is usually inseparable in the case of Chinese negotiations in settling the final Agreement." I repeat, what is said above, that there is no reason to suppose that any steps whatever have been taken by the British and Chinese Cur- poration for the commencement of negotiations for the conclusion of the final Agree- ment for this railway.

Mr. Keswick concluded by saying that "as a portion (some 24 miles) of the railway between Canton and Kowloon runs through British territory, His Majesty's Government will be approached to ascertain, with regard to construction, if they would guarantee in the territory that special arrangements can be made."

Mr. Morrison, who, I presume, is Mr. G. J. Morrison, an engineer by profession, who originally came out to China in the employ of Jardine, Matheson, and Company, and is still one of the consulting engineers of the British and Chinese Corporation, observed that "16 miles of the railway in British territory would be costly, being estimated to cost 24,000 per mile, while the other 8 miles would be easy."

The remarks of Mr. Keswick about approaching His Majesty's Government to ascertain if they would guarantee special arrangements as regards construction in British territory seem to be an echo of the suggestion contained in the last paragraph but two of the Hong Kong letter of the 12th December, that, perhaps, His Majesty's Government might be induced to assist, either by a grant of money or land, or by a guarantee.

**

Mr. Stewart explained to me that the view entertained by the Hong Kong public is that, unless the Concession is promptly utilized by the British and Chinese Corporation, it should be taken out of their hands and transferred to other capitalists to be selected by the Hong Kong Government, who might be willing to undertake it. He had touched on this subject with the Hong Kong Manager of Hong Kong and Shanghae Banking Corporation, who intimated that the Concession might possibly be surrendered "for a consideration," but in his (Mr. Stewart's) belief the expenditure of the British and Chinese Corporation in connection with the Concession had been little or nothing, and that in no case ought they to receive more than actual out-of-pocket expenses ascribable to this particular railway. He was of opinion that there would be no difficulty in raising the necessary capital, provided that the Colony would guarantee a maximum of, say, 3 to 4 per cent. interest. It was in the highest degree improbable that it would be necessary to have recourse to the colonial revenue, however, for the whole of this. Bonds could be issued bearing 5 per cent interest, the Colony engaging to make good only the difference between that rate and the net earnings. He was aware that hitherto assistance of this kind for the construction of railways passing through foreign territory bad not been accorded by His Majesty's Government, but seeing the favourable terms given by the French Government to the railway that is being constructed from Laokai to Yüunan-fu, and that the railways in Shantung are strongly supported by the German Government, he could not help thinking that the time had come for abandoning that policy in the particular instance of the Hong Kong-Canton Railway, which is of such vital importance to the welfare of the Colony.

Considering the delay that has taken place with regard to the utilization of the Concession obtained by the British and Chinese Corporation, he does not think that a proposal to guarantee interest on the cost of construction would be favourably regarded by the Hong Kong Government as long as it remained in their hands, and that an indispensable preliminary would be the resumption of the Concession by His Majesty's Government.

I venture to suggest that if these ideas find favour with His Majesty's Govern ment, it would be necessary that the Chinese Government should be asked to give its consent to the transfer of the existing Concession from the British and Chinese Corporation to any other financial Association which may be indicated by His Majesty's Government.

A copy of this despatch will be communicated confidentially to the Governor of Hong Kong for his information.

I have, &c. (Signed) ERNEST SATOW.

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Inclosure in No. 1.

Extract from Minutes of Meeting of the General Committee of the China Association, held January 22, 1904.

A LETTER from Hong Kong, dated the 12th December, 1903, was read. It requested the Committee to urge upon the Foreign Office the desirability of the immediate opening of Waichow, and also complained of the delay in the construction of the Kowloon-Canton Railway, suggesting an alternative route.

The Chairman stated that undoubtedly there had been delay in commencing work on the railway. It had been necessary to wait until the Shanghae-Nanking Railway Agreement had been signed before taking steps to formulate the final contract for the Kowloon-Canton line, and it should be borne in mind that delay was also in great measure due to the state of affairs in China consequent on the Roxer trouble, and that negotiations were suspended at the request of the Chinese authorities. The terms and conditions of the preliminary Concessions were all subject to revision and final settle- ment when complete surveys were made and proper estimates formed. Such a survey was made after the preliminary Concession was signed. Now that the Shanghae- Nanking final contract had been entered into, and as its terms will govern the Canton- Kowloon line, there should now be no greater delay than is usually inseparable in the case of Chinese negotiations in settling the final Agreement. As a portion (some 24 miles) of the railway between Canton and Kowloon runs through British territory, His Majesty's Government will be approached to ascertain, with regard to construc- tion, if they would guarantee in the territory that special arrangements can be made. It was a mistake to imagine that the delay had been for any but good reasons.

The Chairman offered these remarks, as he was well acquainted with what had taken place.

Sir Thomas Jackson remarked that people in Hong Kong were very anxious that the railway should be built by a British Syndicate.

Mr. Morrison said that 16 miles of the railway in British territory would be costly, being estimated to cost 24,0002. per mile, whilst the other 8 miles would be fairly easy.

It is rather significant to read, after perusal of Mr. Keswick's remarks, that the Shantung Railway was opened from Tsing-tau to Tsinan-fu, a distance of 406 kilom. (252 miles), on the 15th March last.

Had the British and Chinese Corporation been in earnest in carrying out their Concession, they might surely have completed the Kowloon-Canton Railway (less than half the distance) in the same time as the Germans have constructed the Shantung Railway.