CO129-344 - Public Offices & Foreign Office - 1907 — Page 368

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

306

CHINA RAILWAYS.

CONFIDENTIAL.

(18393]

No. 1.

[June 5.]

SECTION 2,

23671

RECE REGE 4 JUL 07)

Sir,

British and Chinese Corporation to Foreign Office.—(Received June 5,)

22, Abchurch Lane, London, June 4, 1907. WE beg leave to forward herewith translation of a telegram received yesterday by the Hong Kong and Shanghae Bank, and which was submitted to you by our Director, Mr. Addis.

We further beg leave to forward a copy of the telegram in reply which is being dispatched to-day.

We are, &c. (British and Chinese Corporation, Limited),

A. N. FREWER, Secretary.

(Signed)

Inclosure 1 in No. 1.

Hong Kong and Shanghae Bank, Shanghae, to Hong Kong and Shanghae Bank, London.

(Telegraphic.)

June 3, 1907.

PEKING wires :-

"With reference to British and Chinese Corporation (Limited) wire of 1st, inform British and Chinese Corporation (Limited), London, the case of unfavourable market it will be provided for in Agreement."

British Consul, Hankow, wires :-

"Have reason to believe other British financiers in the field, prepared offer at 94 or 95. Our opinion is security satisfactory, and we strongly recommend authorize E. G. Hillier negotiate on basis offered. Chinese Government are not prepared to receive advice,"

Inclosure 2 in No. 1.

Hong Kong and Shanghae Bank, London, to Hong Kong and Shanghae Bank, Shanghae.

(Telegraphic.)

June 4, 1907. RE your wire of 3rd, we do not attach great importance to threatened competition, as no others could issue on terms named with security which (it) could not be attached in case of need.

But before coming to final decision it is necessary we should be clearly informed as to the essential points of difference between Provincial Loan Agreement on basis offered and existing Imperial Chinese Railway Loan Agreement.

Would we be entitled to state in prospectus, which must define and state clearly object of loan, and that although a provincial loan it is authorized and unconditionally guaranteed by Chinese Imperial Government ?

British and Chinese Corporation, Chinese Central Railways, Hong Kong and Shanghae Bank opinion is, and Foreign Office concur, that there are grave objections in principle to any departure from the recognized system of Imperial Chinese Railway Loans, which might form a precedent for extensive provincial borrowings in the future and damage Chinese national credit in European markets.

[2525 $ -21