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Government, in its own interests, should recognize that for some years to come railways in China, whether in construction or management, must depend for their success on the services of fully trained foreign experts and honest administration.
The line from Shanghae to Nanking, now in process of construction, is one of four railways granted by China as British Concessions, and undertaken by the British and Chinese Corporation, September 1898. The final Agreement for this line was signed in June 1903; it provided for a loan of 3,250,0001. at 90-manage- ment by an Anglo-Chinese Board of Commissioners--20 per cent of net profits to the concessionnaires and repurchase by China after twelve and a-half years. It was then agreed that the other Concessions, wherein final negotiations had been deferred, pending conclusion of the Shanghae-Nanking Agreement, should be carried out under the same conditions. It was provided in the Loan Agreement that the line which is the ultimate security for the capital invested-should be constructed and equipped as a first-class railway in accordance with the British system and standard, the actual cstimated cost, exclusive of land and interest, for a length of 204 miles being about 2,100,0001 The Shanghae-Woosung line, constructed in September, 1898, has been included in this railway.
Since the conclusion of the Nanking Agreement (1903) public opinion in China has expressed itself strongly against further Railway Concessions to foreigners, aud there has been considerable agitation of an irresponsible kiud, chiefly by students and the press, in favour of regaining control of the Concessions already granted. This movement may, I think, be attributed to two separate causes-first, recognition of the injury caused to China in the exercise of her sovereign rights by the political and strategical Concessions to which I have referred above; second, appreciation of the value of railways as profitable commercial undertakings and a desire to retain their benefits exclusively for the people of China. That public opinion should take this form and expression is natural enough, and if railway construction by the unaided resources of the Chinese were practically feasible, foreigners could not reasonably oppose it, even when there is reason to doubt the good faith of the agitators. In the enthusiasm of this so-called national movement, however, the advocates of railway construction by and for the Chinese overlook certain essential facts, viz. —
1. Whereas China can borrow money abroad upon the security of properly constructed railways at 5 per cent., capital is not, and cannot be, obtainable in the country at so low a price. Chinese merchants and gentry will not invest their funds in 5 per cent. stock, even when guaranteed by the Chinese Government.
2. Railway construction cannot be successfully carried out except by trained experts; it cannot be learned from books or picked up by casual observation of the work. Until China has at her disposal a sufficient number of practically trained and experienced railway engineers, she must either engage the services of foreign experts or waste time and money on bad or dilatory work. This is being demonstrated at the present time in the methods applied to the construction of the Peking-Kalgan line,
and elsewhere.
3. Similarly, as regards management, which is just as important as construction. To make a railway profitable the strictest honesty, economy, and working efficiency are required. Without special training and administrative integrity of its staff, no railway can produce satisfactory results.
Although many patriotic and progressive Chinese are anxious to get rid of all foreign influence in these undertakings, yet it is clear that even those who subscribe funds for purely Chinese railways, and who confidently hope for large profits from such investments, are doubtful as to the possibility of obtaining satisfactory Chinese management for these undertakings. Recent events in Kwantung and Hunan show that, while the merchants and gentry are confident of raising a considerable sum of money, they are not prepared to do so unless the Railway Company and its affairs are managed under conditions differing radically from those of ordinary official adminis- tration; and the same state of affairs exists in other provinces.
How, then, should this important national question be settled? That the provinces desire railways is certain; equally certain that it is the business of the Central Government to see that they are provided under conditions of economy and efficiency.
In the opinion of the writer, the advice given by Mr. Bredon to his Excellency Chang Chih-tung ten years ago was sound; had it been followed in Manchuria, what evils might not have been averted I Looked at in the light of all the facts, it would appear that the policy of the Chinese Government should be as follows :-
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1."That no railway or mining rights be granted hereafter to any foreign Govern- ment or Company involving any preferential, territorial, or political advantages.
2. That all railways hereafter built in Chinese territory be strictly Government undertakings, constructed by the authority and for the benefit of the Chinese Government.
3. That foreign capital be invited upon the security of the Chinese Government and on the best terms obtainable, and that the railways be built in accordance with the best modern system applied to local conditions and under the direction of fully qualified foreign railway engineers.
1. That the lines be financed, constructed, and administered either (a) under foreign management (supervised by Representatives of the Chinese Government, with a proportion of the net profits to go to the concessionnaires; or (b) by contract, at so much a mile, to be subsequently handed over to purely Chinese administration and control; or (c) by allowing a Joint Stock Company to raise the capital and build the line, paying to that Company any amount that might be guaranteed in the form of a lump sum, allowing them to divide that amount, in their discretion, between the various classes of bondholders and shareholders, and giving the Company a reasonable interest in the net profits of the line. Such an arrangement would make it to the interest of the Company to raise the capital on the best terms possible and to construct the railway economically, thus eliminating the necessity for restricting and hampering the work of construction. Under systems at present in force no one is directly interested in keeping down expenditure except the Chinese, and their only way of doing this is to raise difficulties and obstacles which actually cause enormous loss of time and money.
5. That the opinion of the provincial authorities and gentry concerned be ascertained in regard to the route, probable traffic, &c., of any proposed line, but that the final decision in every case rest with the Central Government, and that the proper Board be specially and solely intrusted with the duty of consulting the Bureau of Railways and Mines and submitting definite schemes for Imperial sanction.
The system, at present in favour, of intrusting separate provinces with the initiative and control of their own railway affairs, is calculated to produce chaotic confusion, to impair the resources and authority of the Central Government, and generally to produce the worst possible results. Accompanied by powers to levy special taxes for the benefit of the Railway Bureaux, it must also associate railway construction in the minds of the people with new hardships and abuses. Under such a system the introduction of railways, which might be of the utmost benefit to the people, can only be a source of disappointment and trouble.
The Railway Concessions given to Great Britain in 1898 (ie., lines to connect Soochow-Hangchow-Ningpo, Canton-Kowloon, Pookoo-Sinyang) are now under negotiation; the important trunk line from Hankow to Canton; projected lines in Szechuan, Kiangsi, Anhui, and other provinces--all these are matters of urgent importance to the Government and people of China. England has ever identified herself with the policy which aims at making the Chinese Government stronger and its people more progressive, for the protection of the integrity of the Empire, and for this reason British railway enterprise in China has been consistently confined to purely commercial undertakings, without any motive other than the ultimate development of trade.
It is in the hope that railway construction on these lines may be actively encouraged by the Chinese Government that the above is written.
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*It is evident that the borrowing rate must depend upon the nature of the security offered, and that if method () is adopted, not ouly will the Chinese Government be relieved of the risk of making good deficits out of general revenue, but money will be available ou more general terms. It is obviously inadvisable that national or provincial revenues should be pledged for the construction of railways, but this would have to be done in the event of lines being built by the order of the Government and handed over to Uhiuese adzainia- tration,
Method (e) would appear to offer the best prospects of profitable and smooth working. It should in every case be stipulated that Chinese subjects are entitled to invest in the shares of these Government railways on terms of equality with foreigners.
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