2
On the 1st April I wrote to the Company's Agents, Messrs. Arnhold, Karberg, and Co., to inform them that, although you thought that it might be expedient for the Asiatic Petroleum Company to accept the Regulations of the Chinan-fu Settlement, you were unable to authorize me to sign the Agreement unless clause 2, which bound the lessee to obey those Regulations, were eliminated, adding that I should be glad to know their views as to whether they would be able to make an arrangement with the Chinese authorities without my official cognizance, as you had suggested.
Messrs. Arnhold, Karberg, and Co. replied on the 8th April that there was nothing left for them but to see whether the Chinese were willing to make the Agreement with themselves, as agents of the Asiatic Petroleum Company, and asked me to make the necessary inquiries at my earliest convenience and let them know the result.
Accordingly I wrote on the 10th April to the Settlement Board to explain the position. The following day Mr. Munder, of Messrs. Arnhold, Karberg, and Co., called to see me, and I went with him to call upon Mr. Li Te-shun, who had that day taken over the active duties connected with the management of the Board. I explained to Mr. Li Te-shun that it had become impossible for me to sign the Agreement, so that the lease ought to be arranged with Mr. Munder without any further reference to me, but that I should like a reply to my letter.
On the 13th April Mr. Li Te-shun came to the Consulate and showed me the draft of a letter which the Board proposed to address to me, and we had some conversation together. The position he took up was that my refusal to sign the Agreement had made it necessary to recast the lease, so as to make Messrs. Arnhold, Karberg, and Co. the lessee instead of the Asiatic Petroleum Company, in order that the signature of the German Consul might be attached to the Agreement. I observed that this involved in effect a refusal to lease land to a British Company. He replied that, so far as this If we could accept was the case, the British authorities had only themselves to blame.
the Regulations, as the Germans were prepared to do, the Chinese were quite willing to rent land to British holders, but it would be quite contrary to the Regulations to grant land to any foreigner, except on the guarantee of a communication from his Consul. I told him that I should have to refer the matter to you and send you a copy of the Board's letter when I received it. He withdrew the letter as then drafted, and said he would write another.
Several weeks elapsed, during which I heard no more from the Settlement Board. I sent my card two or three times to ask when I might expect a communication, and on the 30th April I wrote to ask for a definite reply to my previous letter. The answer I received on the 2nd May was that the Board were so busy with the changes involved in the appointment of a new Director that they had no time to write just then, but would do so later on,
Eventually, on the 20th May, I received the note, of which I have the honour to inclose copy and translation herewith, from which it appears that the land has been leased to Messrs. Arnhold, Karberg, and Co., and that Dr. Merklinghaus, the German Consul, has arranged for the issue of the deed.
The contention that a Consular communication of some sort is required for the lease of land under the Chinan-fu Settlement Regulations to a foreign lessee is perhaps a corollary of Articles 3 and 5 of the Regulations, but whether the Chinese are justified in insisting upon the signature by the Consul concerned of an undertaking to enforce the Regulations upon the lessee might, I think, be disputed.
In any case, the conclusion of the present matter has been that the land, instead of heing granted to a British concern, has passed into the name of the German agents, and I think it is desirable that you should be acquainted with the fact.
It is evident that if land can only be acquired for commercial purposes at Chinan-fu by foreigners whose Consuls are prepared to give a guarantee that they will obey the Regulations, we must either induce the Chinese to modify the Regulations so as to make them acceptable to us, or accept the Regulations as they stand, or consent to the exclusion of British lot-holders from the place. The result at present seems to create a preference in favour of Germans, or others whose Consular Representatives are able to act in the way the Chinese require.
I have, &c.
(Signed)
WALTER J. CLENNELL.
(Translation.) Dear Sir,
Inclosure 2 in No. 1.
Chinan-fu Commercial Settlement Board to Consul Clennell.
4th moon, 9th day (May 20, 1907). WE beg to acknowledge the receipt of your two letters, the contents of which have our attention, and we beg to state, with regard to the land upon which Messrs. Arnhold, Karberg, and Co. intend to erect a kerosene oil installation outside the Settlement boundaries, that Dr. Merklinghaus, the German Consul, has now informed us by letter that the issue of a deed of lease has been arranged, as, we believe, you are already
aware.
With compliments, &c.
(The card of the Board is inclosed.)
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