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I received instructions to manage the affairs of the Shanghae- Nanking Railway on the 17th November last, Discussion with regard to the Russo-Japanese Treaty, however, was taking place at that time, and, being unable to proceed to Shanghae, I sent Taotai Chung Wen Yao to take over records and books, and appointed him as my Assistant with a view to greater case in directing the various officials to examine the operations, and for the purpose of carrying on negotiations with the Company. On the 12th January I received the contract and records forwarded by Shêng Kung Pao, the former Vice-President of the Board of Works, together with funds set aside for land purchase. In the first and third months of this year I received from the head office an account of moneys spent in works, and as this account of expenditure (a foreign one) was too extravagant I rejected it, with my censure, to which I received no Petition in reply. In the third month of this year I received also an account of land purchase, and of receipts and expenditure, sent by Shêng Kung Pao. I again inspected all these accounts, and rejected them, with censure. Such were the circumstances which attended my taking over charge.
The loss which accrues from the Shanghae-Nanking contract is much greater than that resulting from the Peking-Hankow trunk and branch lines.
The point of greatest difficulty lies in the establishment of a Board of Directors in which are two Chinese members and three foreign members; since whenever a meeting is held we are in the minority, while they are a majority, so that they have the advantage from the outset. If the Chinese members are not conversant with the English language, they cannot make use of their argumentative powers, and let valuable opportunities slip by; while such as are conversant with English must be sagacious, acute, firm, and patient if they are to fulfil the duties of their post.. It is generally remarked that the additional appointment of a Director-General should be made, but it is not known that the power is in the hands of the Board of Directors as already specified in the contract, so that the appointment of 100 Directors-General would, indeed, be of no advantage. A further point of difficulty is that the financial powers are retained in the hauds of foreigners, and although the Chinese and foreign members sign for moneys used, a foreigner is the accountant. The divisional accounts and the power of disbursing money being in the hands of the engineer; the purchase of materials being managed by Jardine, Matheson, and Co.; the posts of General Traffic Manager and General Stock Manager being filled by foreigners alone-all these are difficulties resultant upon the fact that they are a majority, while we are a minority, Since I have taken over my post I have discovered that these are the points wherein the worst of the malady lies. It is laid down in the contract that rules for the transaction of business by the Board of Directors are to be arranged between the Minister Superintendent and the Company. I was convinced that if matters were to be mended the sole method of proceeding lay in this point, and I fixed upon these rules and directed Chung Wen Yao to discuss them with the Company.
With regard to the reorganization of financial matters at the time of taking up my post. I was almost of one opinion with the Board of Commerce, &c., as expressed in their original Memorial, proposing the procedure by which items were first to be reported to the Board for sanction before they could be disbursed; than which as a means of getting at the root of the matter none seemed more important than this a method which for retaining control seemed second to none in importance. Now, while it is, of course, proper that the Board's decision, in so far as it concerns the purchase of land, which has hitherto been in the hands of a Chinese official, should be followed, yet, in respect of moneys used for construction by the Board of Directors, it appears, upon careful translation, that the original contract specifies merely that accounts of all disbursements should be reported to the Boards concerned after a period of three months for purposes of record. If the matter is argued forcibly with the Company, or if a copy of the original Memorial is actually sent, then, in the event of its rejection by the Company, with a citation of the terms of the contract, there would result a consequent prejudice to the dignity of the Government. It would seem preferable to preserve sovereign rights rather by employing persons to that end than to put methods into execution such as would have the result of creating opposition. I have consequently given directions for the appointment of an additional Chinese accountant in the accountant's office of the Head Office, and directed that the divisional accountant and interpreters shall be dismissed or retained by a Chinese official; that purchases of material shall be made by the Head Office itself instead of by Jardine, Matheson on its behalf; that for the posts of Traffic Superintendent and Superintendent of Stock a Chinese official be additionally appointed to administer with executive powers equal to those of foreigners. To the post of Director of the Head Office, Shih Chao Tseng, a
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Taotai conversant with engineering matters, has been newly appointed; for land purchase and receipts and expenditure, Kan Chun Nien, a Taotai conversant with accounts, has been appointed; since efficient persons are necessary if the control is not to pass over to foreigners. Such are the chief means which I have selected to remedy matters since I have taken over charge.
The duties within the province of the Minister Superintendent are, as it seems to me, of a multifarious nature, of which the most important are the negotiations with the Company. Their object is to obtain one advantage after another; our chief end is the protection of our powers and rights, and at the time of making a statement or using a device we must suit it to the needs of the moment and change according to circum- stances, and with the least inadvertence or lack of discretion on our part they are likely to understand all our secret intentions and resist on each occasion. The expectations of the public are considerable, but they cannot be well aware of the real state of affairs, and cannot therefore be blamed for indulging in a great deal of confused talk. If Í were to take account only of my own interests I would publish every detail, thus not only putting a stop to the distrust of the many, but even obtaining a false renown, whereby, however, I should be bringing to naught the whole condition of this railway; and herein lies the origin of the allegation contained in the Memorial of Wu Yu Sheng that I have done nothing to remedy matters.
As to the funds used in works in the third month of this year, I received an estimate for engineering works by Collinson, the engineer-in-chief, in which it was stated that a total 2,457,000. odd would be required, together with a table of estimated expenses by the foreign accountant, Morriss-a total of 3,136,0001. odd. Mr. Bland, the representative of the Company, then raised the question of a further loan of 1,000,000Z. I gave repeated directions to the varions officials in the Shanghae office to criticize and argue on this point with thoroughness, but without result. Mr. Bland and Collinson then came to the metropolis and debated the question by turns with me, whereupon I ordered Chung Wen Yao and the others to proceed to the various points and make an inspection and diminish the calculation. We have decided that the amount of expenditure shall be 2,007,0001. as an estimate for engineering work; 125,000l. as repayment of the official funds used for the Shanghae-Woosung line; 397,5001, as interest on the loans; 350,0001. funds for land purchase; so that the real sum necessary was 2,879,5001.
The asset from which this amount must be taken are the first loan, of which the real amount at 90 was 2,025,0001; interest repaid, 81,2301.; traffic receipts, calculated prematurely, 150,000Z.; in addition to these, a further sum, detailed on a slip inclosed herewith, amounting to 100,000, which was a fund prepared for land purchase; the total of these amounts leaving a deficit of 523,2501. If this sum must be borrowed, it will be necessary to add thereto for discount and interest, and to provide for unforeseen needs, as also for funds to build extra branch lines, or, in all, about 650,000. When I reported to the Board of Commerce that up to the end of February there was 650,000%. in London and 2,800,000 taels odd in Shanghae, these sums were included in the first loan of 2,025,0007., and were for use in daily expenditure on works and land purchase. The Boards of Commerce and Revenue did not include these two amounts in their calculations, but considered them as separate and distinct funds, in ignorance that even including these two sums there would still be 650,0001, needed, If the sum thus needed can be appropriated by the Board, it will, of course, be unnecessary to ask for a foreign loan. My official duties do not include finance, and I have no means of knowing exactly whether this sum can be appropriated or not. to be feared, however, that it would be very difficult for the Board to prepare forthwith for this sudden extra expenditure of 650,0001., which is equivalent to about 4,700,000 taels. I find that last year the Board of Commerce memorialized the Throne on bebalf of the Kiangsu gentry, who proposed to get together a public loan of 3,000,000 or 4,000,000 taels, and this year another communication states that the Soochow gentry make themselves answerable for a sum of 700,000 taels; and, from the fact that they have not yet raised these sums, the difficulty which the officials and people experience in raising funds is evident. Since the Board of Commerce formerly memorialized that I should make an exhaustive calculation and report as to whether there is any means of economizing in the use of the funds at present in hand, and of thus avoiding this further loan, I have for several months past directed the various officials employed at the Peking and Shanghae offices to effect every possible economy, and I consider that the sum needed must positively be raised forthwith.
It is
Persons who discuss these matters are all anxiety, because the capital is so large that there will be a proportionate difficulty in redeeming the railway. If the capital,
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