CO129-344 - Public Offices & Foreign Office - 1907 — Page 399

2

Inclosure in No. 1.

Mr. Bland to Sir J. Jordan.

Dear Sir John,

Peking, April 24, 1907. RE the Japanese Railway Convention and our conversation of this morning, I find it easier to put my views in letter form than in a Memorandum, and I hope you will not mind.

There are naturally two sides to the question-the political side and the legal rights of the Northern Railways bondholders. With the former I am not concerned ; nevertheless, it seems to me that if the Japanese claim, and we admit, that they are entitled to a reversion of the Russians' real and potential rights in the Manchurian provinces, the purposes for which we supported Japan in the war and the avowed objects of our alliance are alike defeated. "Reading the recently concluded Convention it would appear that the South Manchurian Railway takes the place and the policy of the Russian Bark, and these we always contested. If railways in the three provinces can only be built under Japanese direction and with Japanese capital, the "open door" is a myth. But these are matters for the British Government.

As regards the interests of the Northern Railways, it seems to me indisputable that the Japanese Convention violates our rights and the security of the bondholders. By the Agreement of October 1898 it is laid down that the construction of any branches or extensions connecting with the lines named in that Agreement (which include the line to Hsin Min Tun) must be undertaken by the Imperial Chinese Railways, and if the latter's funds are not sufficient for the purpose, it must apply to the British and Chinese Corporation.

This stipulation was confirmed and amplified by the Agreement made between Sir Ernest Satow and Yuan Kungpao in April 1902, wherein it was laid down, "in order to secure the existing interests of the railways," that "the construction of any new railway within a distance of 80 miles of any portion of the existing lines, for which Concessions have not been signed previous to the date of this Agreement, shall be undertaken by the Administrators-General of the Imperial Northern Railways."

It was agreed between England and Russia in 1899, by a Convention in regard to their respective railway interests, that Great Britain would not seck on her own account, or for British subjects, any railway Concessions to the north of the Great Wall. Great Britain per contra obtained a free band, as far as Russia was concerned, in the Yang-tsze Valley. But the Agreement above referred to (April 1902) shows clearly that this Convention was not intended to infringe the vested rights of the Northern Railways, and in the case of the Japanese lines we are entitled to inquire and to be informed whether the Agreements are based on the reversion of Russian rights, or whether they are simply commercial undertakings. In the latter case it can easily be shown that to secure the existing interests of the Northern Railways" it is essential that the extension from Hsin Min Tun to Moukden should form part of the Imperial Chinese Railways system.

But if this Agreement is final, it should at least be clearly understood that the Japanese control of the line ceases at the Liao River, and that the section west of that river is administered as part of the Imperial Chinese Railways system. The Agree- ment speaks of the line as the Fengtien-Hsin Min Tun Railway, which, until the loan for its reconstruction is redeemed, is under the control of the Japanese Engineer and Accountant. Whether this Japanese control will stop at the Liao River must depend, I think, on the attitude of the Imperial Chinese Railways, and this will depend on the policy of the Chinese Government and the action taken by the Corporation. In any case, even if the Japanese cease to function at the river, it will create a most anomalous and unsatisfactory state of affairs. The position will be similar to that on the Kowloon frontier of the Canton-Kowloon Railway, only that in this case the Japanese Agreement takes no note of the British interests on the west bank of the Liao, and the Agreement certainly reads as if the railway were going to be under one and the same (ie., Japanese) administration from Moukden to Hsin Min Tun,

It appears to me that the Chinese Government should at least undertake that, conforming to the Agreements of 1898 and 1902, the Imperial Chinese Railway Administration should extend up to the Liao River, and the Japanese interests and control should be limited to the line east of that boundary. This, as it is nominally in Chinese possession, they can do if they wish. The effect of the Japanese Agreement will be very prejudicial to the Northern Railways interests, as its Director, Mr. Chow,

3

admits it has already injured their traffic considerably, and the whole intention of our Agreements was to insure that, within a reasonable distance of our lines, there should not be any rival railways competing with them to their detriment.

I propose to wire in this sense to the Corporation unless you see objection to my

doing so.

Believe me, &c.

(Signed)

J. O. P. BLAND,

337

!