CO129-331 - Public Offices - 1905 — Page 591

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{This Document is the Property of His Britannic Majesty's Government).

AFFAIRS OF CHINA,

CONFIDENTIAL.

Enclos

w No. I

Inagu

43346

[Noveinber 18.]

TRESS & DEC 05, SECTION 4.

Sir E. Satow to the Marquess of Lansdowne.--(Received November 18.)

(No. 320. Confidential.) My Lord,

Peking, September 30, 1905. WITH reference to my telegram No. 169 of the 15th instant, I have the honour to transmit to your Lordship herewith copy of a letter which I have received from His Majesty's Consul-General at Hankow, with regard to the terms on which he thinks the Wuchang Viceroy would accept the loans he requires for the construction of the Hupei sections of the Hankow-Canton and Hankow--Szechuan Railways.

Mr. Cordès, the agent of the Deutsch-Asiatische Bank, who has been at Hankow endeavouring to secure these loans for his bank, has returned here without having succeeded,

I have, &c. (Signed)

Dear Sir Ernest Satow,

Inclosure in No. 1.

Consul-General Fraser to Sir E. Satow.

ERNEST SATOW.

Kuling, September 20, 1905. SAVAGE sent up your telegram as to Chang's latest scheme of raising one loan to cover the Hunci sections of both the Hankow-Szechuan and the Hankow-Canton lines. I think I told you that the latter section is only 80 miles at most, and that Chang is at variance with the other two provinces as to the share of the loans each should be responsible for. Hupei and Hunan are trying to make Kuangtung see that the section to Fatshan actually in running order is a valuable asset which should be taken into account, while Kuangtung blandly suggests that the length of line in each province should alone govern the apportionment of pecuniary responsibility, and flunan would like to put some extra share on the other two as having the termini. suppose that is why he seems now inclined to leave out Hunan, as he first did Kuangtung.

I

I have sent Savage the Chinese draft of a note to the Viceroy, in which he is reminded of his original proposal of a 3,000,0001. loan for the construction of the Canton--Hankow Railway in Hupei and Hunan, which was telegraphed to you, passed ou to the Foreign Office, and brought a response from the British Chinese Corporation, whereas the Szechuan-Hankow Railway was broached only lately, and a distinct Syndicate has asked leave to tender for it. It is added that the two sections, though in one province, are parts of distinct enterprises, just as the two Syndicates, though both British, are independent of each other; to issue one loan for both sections would, in my superior's opinion, not be for the interest of IIupci or England. I understood from him that his reason for his new proposal was that the Hupei li-kin, the free asset which he decided to make the security for railway loans in this province, was too big for any one section; if that is his reason, the note submits that he could attain his object as well by giving notice to the tenderers that the two loans would, so far as Hupei is concerned, have the same security and rauk equally in regard to it. He is also reminded that he promised to consult Hunan by telegraph as to its loan security, and that the British Chinese Corporation are awaiting the awer so as to tender for the 3,000,000). I shall be in Hankow on the 24th, to awaii vitation to an interview.

Chang's experience of foreign railway loans and Agreements has made him very suspicious, hence his very guarded despatch of assurance. But his dislike for French and Belgians and Russians narrows the field of possible competitors, the Americans being also in disfavour, and I think that he also undoubtedly prefers us to Germans, though they are astute enough to offer him tempting terms, as I reported. He will come in time to see that foreign aid is necessary far more than be imagines now as to running and management, if he is not scared by immediate demands for the control

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