CO129-338 - Public Offices & Others - 1906 — Page 114

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while as regards your observation that no such system exists in Shanghae city or other Chinese towns, and your request that such experiments should not be tried in the locality in question, this Board is at a loss to conjecture what is intended by these words. With reference also to your remark that foreigners at Shanghae have always arranged their own police, sanitation, road-making, and other municipal requirements, and will continue to do so, I have the honour to point out that this not only implies obstruction of Chinese measures of local reorganization, but also that the power of extending the Settlement* should be unlimited, a view with which this Board is entirely unable to agree.

I avail, &c.

*#

Translator's Note.—Or, " the extension of the powers of the Settlement."

[This Document is the Property of His Britannic Majesty's Governin...

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AFFAIRS OF CHINA.

CONFIDENTIAL.

[October 22.] 110

[35555]

(No. 364.) Sir,

No. 1.

SECTION 6.

C O

47844

Mr. Carnegie to Sir Edward Grey.--(Received October 22.)

Peking, September 2, 1906. NOV OF IN my despatch No. 348 of the 18th August, I had the honour to report that at an interview with the Wai-wu Pu I was informed that Japan was proposing conditions for the restoration of the administration of Newchang to China, which the latter was unwilling to accept. In the course of a conversation which I had with Mr. Hayashi some days ago, I asked him if what I had heard at the Wai-wu Pu was true. He replied at once in the affirmative, and proceeded to tell me that his Government had proposed the three conditions which I had the honour of communicating to you in my telegram No. 159 of the 25th August-namely, (1), that the improvements of the town which had been effected by the Japanese military authorities during their occupation and paid for out of the customs revenue should be recognized by China; (2), that the customs duties should continue to be paid, as at present, into the Yokohama Specie Bank; and (3), that China should maintain the existing system of municipal administration in regard to police and sanitary matters. There were also, he said, some less important questions which would have to be settled, one of them being the future position of a Japanese Water and Electric Light Company. He anticipated that condition (2) would cause most difficulty. In reply to my question as to whether all the customs revenue had been expended on improvements, he stated that there was a balance of some 3,000,000 yen which his Government was ready to hand over to China.

Before leaving, I asked Mr. Hayashi if he had any objection to giving me a copy of the Supplementary Agreement of 1898 between the Eastern Railway Company and the Chinese Government which we had discussed the last time I saw him (see my above- mentioned despatch). He said that he could not do that, but he would lend me the only copy he possessed of a collection of Agreements between Russia and China which contained the one I wanted.

I found that this volume consisted of a number of Agreements, several of which had never been signed or ratified, while others appear in "Rockhill." There were two, however, of which inclose copies, that, so far as I am aware, have not as yet been published-viz., an Agreement, dated the 27th August, 1896, between the Chinese Government and the Russo-Chinese Bank to enter into partnership, the former supplying a capital of 5,000,000 taels, and the Supplementary Agreement of the 24th June, 1898, referred to above, by which the terms of the Railway Agreement of 1896 ("Rockhill," p. 212) were to be made applicable to the southern branch line to Dalny. I would draw attention to Article 3 respecting the obligation to destroy temporary branch lines, amongst others, that to Yingkow (Newchwang) after a certain date, and to Article 5 regarding the collection by Russia of customs duties at Dalny. Doubtless, the arrangement reported by Sir C. MacDonald in his despatch No. 79 of the 30th April, 1900, but which was never brought into effect,* was made under the provisions of this Article.

On the receipt of your telegram No. 153 of the 23rd ultimo, instructing me to point out to the Chinese Government that so long as there were no customs at other ports in Manchuria, Newchang should be a free port, I addressed a noic to the Wai-wu Pu, of which I inclose copy. I have the honour to inclose also translation of their reply, the substance of which I telegraphed to you on the 31st August, stating that negotiations were proceeding with Japan and Russia respecting the establishment of custom-houses in South and North Manchuria, that Newchang could not be made a free port, as the customs revenue was involved in the indemnity due to foreign Powers, and that the grounds I had advanced for making Newchwang a free port could not be entertained.

* The custom-honso was open for forty-eight hours in February 1903.—W. L. [2183 y--6]

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