2
track had been bought, and that the land referred to by the Engineer-in-chief was not land actually needed for the track but for excavating to provide material for embank-
ments.
Mr. Bland observed that this report did not coincide with his information on the subject; he was led to understand that the double track could not be constructed without the additional purchases in question, and as the total cost of these was stated to be less than 20,000 taels, he hoped the expenditure would be authorized. The Directors of the Corporation were very anxious that this condition of the Loan Agree- ment should be completely fulfilled.
As regards the question of commission on materials, Mr. Bland recapitulated the facts, pointing out that in arbitrarily withholding payment of all sums due to the Corporation since last April on local purchases, the Chinese Commissioners had committed a breach of the Agreement and of recognized practice. The amount out- standing on this account, to the 31st December, was between 46,000 and 47,000 taels. He trusted that his Excellency would now recommend to the Yu-chuan Pu that payment of this amount be authorized, as a necessary preliminary to the introduction of the proposed modifications in the system of administration. In proof of its earnest desire for the success of this enterprise and for the maintenance of good relations with the Chinese Government, the Corporation was prepared to waive its rights to commission on local purchases of Chinese production from the 1st January, provided that, coincident with the introduction of the modified system of administration, it be under- stood and agreed that the Corporation would be agents for the railway and entitled to commission on all material of foreign origin. Inasmuch as, controlled by the Board of Commissioners, and in terms of the Loan Agreement, such commission is properly payable, the proposed arrangement must commend itself to the Chinese Government as reasonable and practical.
On this point a long discussion took place. His Excellency T'ang maintained that if the Corporation's object was to deal equitably with the Chinese and to promote the economical working of the railway, it was inadvisable to claim too wide a scope for the Corporation's right in regard to commission. He was prepared to advise the Yu-chuan Pu that the Corporation should be formally recognized as agents for the railway, but would limit the commission to "goods ordered in England," on the ground that only in such cases would supervision be exercised or services rendered. Mr. Bland stated that his instructions on this point were definite, and he saw no prospect of the Corporation modifying their stipulation, viz., that, as agents, they should receive commission ou ali materials of foreign origin. His Excellency's proposal would practically put a premium on goods of non-British origin.
His Excellency Tang referred to the difficulty of defining the scope of the term "materials." Eventually he modified his proposal, to allow the Corporation commission "on all goods ordered from abroad.”
Mr. Bland undertook to telegraph to the Corporation whatever proposals might finally be made by the Yu-chuan Pu, but did not anticipate the Corporation's acceptance of this condition. He pointed out that, in practice, such an arrangement would no doubt lead to a large portion of the railway's supplies being regularly imported by local firms, which would render the Corporation's agency a position of small profit and much possibility of friction.
(In this opinion Sir John Jordan concurred.)
Several alternative solutions of the difficulty were discussed, including the
payment of a fixed salary to the Corporation as agents, his Excellency Tang proposing to appropriate for this purpose the salaries now paid to the Board of Commissioners. No definite proposal was, however, made.
As regards the Corporation's claims for payment of commission accounts outstanding to the 31st December, his Excellency Tang stated that there was no intention of refusing payment of the entire claim, but that settlement had been delayed because, in his opinion, it included charges on several items on which commission could not properly be claimed, such as ballast, brickwork, &c. He would be glad to recommend payment on the lines suggested by the Deputy Director-General, Mr. Chung.
Mr. Bland urged that the important concessions now made by the Corporation to meet the views of the Chinese Government should be met by the adjustment of this comparatively unimportant matter. Mr. Chung's proposals were out of the question, as might be inferrred by his refusal to allow commission on such an item as cement. appeared to ignore the Corporation's rights under the agreement to claim commission on all materials. If the Corporation modified this claim, it would be as the result of an amicable arrangement and good-will, not of an arbitrary decision.
He
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Sir John Jordan expressed the hope that these matters might be arranged before his Excellency Tang's departure from Peking; he thought the introduction of the modified system of administration could not but prove beneficial to the railway and would do much to remove local opposition to the enterprise.
With a view to facilitating the settlement of the whole question, Mr. Bland finally agreed, subject to arrangement of the other conditions above mentioned, to accept payment of 35,000 taels in settlement of the claim for commissions on local purchases It would be understood, moreover, that, from that date and to the 31st December, until the new system of administration and the Corporation's agency came into effect, the Corporation will charge commission on materials of foreign origin only and not on local purchases of Chinese production.
In regard to the procedure for introducing the modified system of administration, Mr. Bland considered that the matter would be most satisfactorily arranged if the Board of Commissioners would pass the necessary resolutions at a formal meeting, electing a Chinese member of the Board to be Chairman and Managing Director, and at the same time clearly defining the respective functions of the Engineer-in-chief, the The introduction of this system being Accountant, and the Traffic Manager. admittedly tentative, intended to facilitate the smooth working of the railway, but in no way to supersede the conditions and rights laid down in the Loan Agreements, it The Board of was inadvisable to make it the subject of any formal Agreement. Commissioners is in control of the railway's affairs and the introduction of the new system could therefore only emanate from that Board.
After a brief discussion of the system of finances and accounts and a suggestion by his Excellency Tang that the Corporation might consent to the loan of Mr. Henderson's services with a view to putting these on the same basis as those of the northern railways, it was agreed that Mr. Bland should attend a meeting at the Yu Chuan Pu on Thursday, the 2nd May, for the final discussion of these questions.
(Signed) J. O. P. BLAND.
Inclosure 2 in No. 1.
British and Chinese Corporation, Shanghae, to the Wai-wu Pu.
Peking, January 2, 1907. Gentlemen,
WITH reference to the draft of a despatch in re Shanghae -Nanking Railway affairs, addressed to his Excellency Tang Shao-yi, copy of which was inclosed in mine to you of the 31st ultimo, I beg to inform you that is Majesty's Minister is opposed to the arrangement proposed in its concluding paragraph, holding that the British Government's Representative is not in a position officially to approve the nomination of a Chinese official to the railway's Board of Commissioners, and he considers that the end which we have in view, viz., to place on record the Legation's knowledge and approval of the change which it is proposed to make in the system of control, will be attained by amending the paragraph in question as follows:---
After the words "Chairman of the Board," read "would require to be communicated to His Majesty's Minister by the Wai-wu Pu,"
which amendment has accordingly been made.
I am also altering the conclusion of the second paragraph on p. 4 as follows:- After the words "an arrangement which " read "taken together with the proposed modification of the system of control, will, I trust, be regarded as an indication of the liberal spirit in which the Corporation has met the views of the Chinese Govern- ment."
I remain, &c. (Signed) J. O. P. BLAND,
Representative in China.
B 2
[2525 r-4
-41
399
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