380
2
gentry of Hunan and Kuangtung to concert a method of actually providing funds. Later I received from the Liang Kuang Viceroy, on the 16th January, 1905, a telegram stating the discussion of this matter was possible only on the funds to redeem the line being got ready, but the Kuangtung gentry were without cohesion, the advocates of the redemption having no money and the moneyed men not caring, so that the gentry's resources could not be leant on, while the official resources, being absolutely bankrupt, could even less bear such a mighty burden. He added that as, in case the contract was cancelled, vast sums would be required at once to be paid over, even if there were any other scheme of finding the money, the need was too pressing for them to avail. He suggested the propriety of the three provinces making a joint foreign loan of so many myriads, repayable in equal instalments over a series of years. If loan went through and Concession was cancelled the proceeds would redeem the line; if the Concession was not annulled the money could be repaid at once, so that the interest wasted would be limited. The Hunan gentry and merchants also telegraphed that they had no scheme for providing vast funds at once. Bethinking me that, as the position of the three provinces was identical, there was no help, I then decided on borrowing the money. At the same time I telegraphed my views to the Governor of Hunan to take the opinion of his gentry, and his reply was that after thorough inquiry amongst them they agreed to my proposal.
Exhaustive inquiry proved that the English Consul's offer provided the lowest rate of interest and the full sum in sterling without discount, only he demanded, besides, privileges in Kuangtung, a point which I politely put off. This caused the negotiations to be protracted without settlement, until, on the 31st August, Liang Cheng, your Minister to America, suddenly telegraphed that the China Development Company's Directors had executed the draft Agreement under which the first instalment of 2,900,806 odd gold dollars was payable on the 7th September, i.e., 9th of 8th moon, at New York, and as the date was at hand he must ask the combined provinces quickly to provide that the funds be remitted by telegraph to America before the 7th September, to prevent a catastrophe. I replied asking him to get an extension of ten days to enable provision to be made. His answer was that he had consulted Foster as to postponement suggested, who replied that he had, in accordance with my telegraphic statement that we were ready to redeem the Concession at figure demanded, apprised Morgan that the execution of the regular Agreement on the 6th would depend on the payment of this instalment. Any further change would render recovery impossible, and so he prayed that remittance be telegraphed. Now, the idea of the Company was that China, being in their opinion very poor, could never within ten days suddenly find the vast sum of several millions. So their head shareholders, after signing the draft Agreement, contrived to spin out three months without confirming it, keeping the completion of the matter uncertain, so as to prevent arrangements for providing the money or borrowing it. And then seven days before due date they telegraphed to China to confirm, execute, and pay the money, If money could not be got together, then this Agreement was utterly upset, and they could taunt us with having no money and making fools of ourselves. This plot was the most cunning and deadly conceivable.
At the time the English Consul had already gone to Lu-shan to avoid the heat. I foresaw that, negotiating in straits, I should be sure to meet with extreme demands. Besides, the drawing of the Agreement itself would need over twenty days, and if the sum payable to the Development Company were too late by a single day the whole situation would be wrecked. At this moment I was unable to ask for time abroad, and equally unable to apply for aid to other provinces.
Here was a great undertaking, affecting the position of the whole of South China, an important measure ordered by special Rescript, which for two years had been discussed until the whole world knew of it. If, simply because of want of funds, redemption should prove impossible, and we cast away the draft Agreement, not only would the power be lost for ever, but it would make all nations sneer at China's representatives as people who talked without making good, and this would hamper in many ways all our future international dealings.
During these seven days I wandered about my abode in absolute despair, and how this business was to be accomplished I dared not surmise.
The above was the sixth of my troubles.
Fortunately, the Hupei Government Bank's credit is good, and it is trusted by the foreign banks.
I called together the Commissioners and Intendants, and held earnest debate.
In consideration of the national interests involved, they agreed in taking the responsibility; so I directed the Government Bank to devise means to go surety, and
3
apply first to the Hong Kong and Shanghae Bank for a loan of 3,000,000 taels at interest, the Government Bank itself collecting over 2,000,000 taels, and so, quite beyond my hopes, the telegraphic remittance duly reached America in time.
I at once, by telegram to the Grand Council, submitted to your Majesty the final Redemption Agreement, and obtained sanction to its being executed. At the same time I had telegraphed to the English Consul to return to Hankow and negotiate the Loan Agreement.
The English Consul, seeing I had managed myself to raise temporary loan to pay the first instalment, and as the redemption of line was a matter of high politics, was also ready to assist in putting through the grand undertaking. Thereupon no further mention was made of the earlier demand, and the Articles of the Agreement were all drawn on lines of the August 1900 Agreement, under which Hupei borrowed 500,000 taels from the Hong Kong and Shanghae Bank for the provision of military needs for the protection of the Yang-tsze. The Agreement has been communicated to the Board of Foreign Affairs. This sort of borrowing certainly does not imply the slightest lending of our railway rights.
The loan being settled, the second instalment was thereunder paid over in full to the Development Company on the due date-10th October.
Thereupon the Company telegraphed to the foreigners at its offices in Shanghae and Canton to hand over by list to China's deputies the plans and records deposited in Shanghae and Canton and the railway already built, with machinery, cars, houses and buildings, and all appurtenances whatever. I had sent officers for the purpose to both places.
The Agreement for the sale of the railway drawn up by the Company states that "The Chinese Government takes possession of all the China Development Company's properties in China, the railway completed, plant, survey maps and plans, special mining privileges, together with all rights and privileges in China, whether set forth or impliedly included." Consideration of the words "special" to "included" will indicate how immense was the former great loss of rights, which now, happily, is entirely redeemed, so that hereby complications are for ever cleared up and vast calamity
removed.
This success is humbly ascribed to the awful virtue of the Court, together with the whole-hearted support of the Council, the auxiliary scheme of the gentry and people of the three provinces, while the Minister, Liang Cheng, whose ability and experience are alike excellent, loyally devised for the State and suited his arguments to his opportunities.
Thus was this affair accomplished.
It has now been decided that the funds for constructing the line shall be provided, by the combined efforts of the officials and gentry of the three provinces, foreign loans being barred.
But as the funds are to be collected through the gentry and people of each province each will be concerned with its own finance and railway construction. There will have to be a general uniformity, but identity of system will be impossible. It will be quite dissimilar from the starting of railways elsewhere with borrowed money.
On the principle that enterprises on part of gentry and people are entirely dependent on the aid of the local authorities, I submit to your Majesty that it seems needful to charge the high provincial authorities concerned to instruct their subordinates, high and low, together with the gentry, scholars, traders, and people, in accordance with local conditions, to devise means to provide for undertaking, so that there be no want of co-operation nor the work be protracted.
I have now received from the Minister to America, Liang Ch'eng, by post, the agreement of sale negotiated with the Development Company and the coupons for interest paid on the outstanding dollar bonds, as well as the inventories of the articles taken over by the Deputies at Shanghae and Canton.
I am writing to the Board of Foreign Affairs and Commerce, and having carefully drawn up the statement appended in concert with the Viceroy of Liang Kuang and the Governor of Hunan, I have the honour humbly to submit our joint Report for your Majesty's consideration,
380
2
gentry of Hunan and Kuangtung to concert a method of actually providing funds. Later I received from the Liang Kuang Viceroy, on the 16th January, 1905, a telegram stating the discussion of this matter was possible only on the funds to redeem the line being got ready, but the Kuangtung gentry were without cohesion, the advocates of the redemption having no money and the moneyed men not caring, so that the gentry's resources could not be leant on, while the official resources, being absolutely bankrupt, could even less bear such a mighty burden. He added that as, in case the contract was cancelled, vast sums would be required at once to be paid over, even if there were any other scheme of finding the money, the need was too pressing for them to avail. He suggested the propriety of the three provinces making a joint foreign loan of so many myriads, repayable in equal instalments over a series of years. If loan went through and Concession was cancelled the proceeds would redeem the line; if the Concession was not anuulled the money could be repayed at once, so that the interest wasted would be limited. The Hunan gentry and merchants also telegraphed that they had no scheme for providing vast funds at once. Bethinking me that, as the position of the three provinces was identical, there was no help, I then decided on borrowing the money. At the same time I telegraphed my views to the Governor of Hunan to take the opinion of his gentry, and his reply was that after thorough inquiry amongst them they agreed to my proposal.
Exhaustive inquiry proved that the English Consul's offer provided the lowest rate of interest and the full sum in sterling without discount, only he demanded, besides, privileges in Kuangtung, a point which I politely put off. This caused the negotiations to be protracted without settlement, until, on the 31st August, Liang Cheng, your Minister to America, suddenly telegraphed that the China Development Company's Directors had executed the draft Agreement under which the first instalment of 2,900,806 odd gold dollars was payable on the 7th September, i.c., 9th of 8th moon, at New York, and as the date was at hand he must ask the combined provinces quickly to provide that the funds be remitted by telegraph to America before the 7th September, to prevent a catastrophe. I replied asking him to get an extension of ten days to enable provision to be made. His answer was that he had consulted Foster as to postponement suggested, who replied that he had, in accordance with my telegraphic statement that we were ready to redeem the Concession at figure demanded, apprised Morgan that the execution of the regular Agreement ou the 6th would depend on the payment of this instalment. Any further change would render recovery impossible, and so he prayed that remittance be telegraphed. Now, the idea of the Company was that China, being in their opinion very poor, could never within ten days suddenly find the vast sum of several millions. So their head shareholders, after signing the draft Agreement, contrived to spin out three months without confirming it, keeping the completion of the matter uncertain, so as to prevent arrangements for providing the money or borrowing it. And then seven days before due date they telegraphed to China to confirm, execute, and pay the money, If money could not be got together, then this Agreement was utterly upset, and they could taunt us with having no money and making fools of ourselves. This plot was the most cunning and deadly conceivable.
At the time the English Consul had already gone to Lu-shan to avoid the heat. I foresaw that, negotiating in straits, I should be sure to meet with extreme demands. Besides, the drawing of the Agreement itself would need over twenty days, and if the sum payable to the Development Company were too late by a single day the whole situation would be wrecked. At this moment I was unable to ask for time abroad, and equally unable to apply for aid to other provinces.
Here was a great undertaking, affecting the position of the whole of South China, an important measure ordered by special Rescript, which for two years had been discussed until the whole world knew of it. If, simply because of want of funds, redemp tion should prove impossible, and we cast away the draft Agreement, not only would the power be lost for ever, but it would make all nations sneer at China's representatives as people who talked without making good, and this would hamper in many ways all our future international dealings.
During these seven days I wandered about my abode in absolute despair, and how this business was to be accomplished I dared not surmise.
The above was the sixth of my troubles.
Fortunately, the Hupei Government Bank's credit is good, and it is trusted by the foreign banks.
I called together the Commissioners and Intendauts, and held earnest debate.
In consideration of the national interests involved, they agreed in taking the responsibility; so I directed the Government Bank to devise means to go surety, and
3
apply first to the Hong Kong and Shanghae Bank for a loan of 3,000,000 taels at interest, the Government Bank itself collecting over 2,000,000 taels, and so, quite beyond my hopes, the telegraphic remittance duly reached America in time.
I at once, by telegram to the Grand Council, submitted to your Majesty the final Redemption Agreement, and obtained sanction to its being executed. At the same time I had telegraphed to the English Consul to return to Hankow and negotiate the Loan Agreement.
The English Consul, seeing I had managed myself to raise temporary loan to pay the first instalment, and as the redemption of line was a matter of high politics, was also ready to assist in putting through the grand undertaking. Thereupon no further mention was made of the earlier demand, and the Articles of the Agreement were all drawn on lines of the August 1900 Agreement, under which Hupei borrowed 500,000 taels from the Hong Kong and Shanghae Bauk for the provision of military needs for the protection of the Yang-tsze. The Agreement has been communicated to the Board of Foreign Affairs. This sort of borrowing certainly does not imply the slightest lending of our railway rights.
The loan being settled, the second instalment was thereunder paid over in full to the Development Company on the due date-10th October.
Thereupon the Company telegraphed to the foreigners at its offices in Shanghae and Canton to hand over by list to China's deputies the plans and records deposited in Shanghae and Canton and the railway already built, with machinery, cars, houses and buildings, and all appurtenances whatever. I had sent officers for the purpose to both places.
The Agreement for the sail of the railway drawn up by the Company states that "The Chinese Government takes possession of all the China Development Company's properties in China, the railway completed, plant, survey maps and plans, special mining privileges, together with all rights and privileges in China, whether set forth or impliedly included." Consideration of the words "special" to "included" will indicate how immense was the former great loss of rights, which now, happily, is entirely redeemed, so that hereby complications are for ever cleared up and vast calamity
removed.
This success is humbly ascribed to the awful virtue of the Court, together with the whole-hearted support of the Council, the auxiliary scheme of the gentry and people of the three provinces, while the Minister, Liang Cheng, whose ability and experience are alike excellent, loyally devised for the State and suited his arguments to his oppor- tunities.
Thus was this affair accomplished.
It has now been decided that the funds for constructing the line shall be provided, by the combined efforts of the officials and gentry of the three provinces, foreign loans being barred.
But as the funds are to be collected through the gentry and people of each province each will be concerned with its own finance and railway construction. There will have to be a general uniformity, but identity of system will be impossible. It will be quite dissimilar from the starting of railways elsewhere with borrowed money.
On the principle that enterprises on part of gentry and people are entirely dependent on the aid of the local authorities, I submit to your Majesty that it seems needful to charge the high provincial authorities concerned to instruct their subordi nates, high and low, together with the gentry, scholars, traders, and people, in accordance with local conditions, to devise means to provide for undertaking, so that there be no want of co-operation nor the work be protracted.
I have now received from the Minister to America, Liang Ch'eng, by post, the agreement of sale negotiated with the Development Company and the coupons for interest paid on the outstanding dollar bonds, as well as the inventories of the articles taken over by the Deputies at Shanghae and Canton.
I am writing to the Board of Foreign Affairs and Commerce, and having carefully drawn up the statement appended in concert with the Viceroy of Liang Kuang and the Governor of Hunan, I have the honour humbly to submit our joint Report for your Majesty's consideration,
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