2
though fully aware of the proposal (put forward in consequence of a private arrange- ment between the British and French groups without the acquiescence of the French Government) that there should be purely financial participation between the British and French banks, made no imputation of bad faith against His Majesty's Government, though his Excellency did not, it is true, entertain the proposal. There is therefore no ground for assuming that he would do so on learning that the two Governments had made fresh arrangements and had agreed on a scheme for equal control, &c., which would, in Sir E. Grey's opinion, merely be an extension of the principle of British and French co-operation.
Nor is there any reason to anticipate that the Concession will be granted to foreign persons or Syndicates of other nationalities, since Great Britain and France, acting in unison, should be well able to prevent such an eventuality.
With regard to the point raised in the fourth paragraph of your letter, that the Japanese might feel aggrieved at the course adopted by this country, I am to inform you that on the 17th June last His Majesty's Minister at Peking reported, in a telegram paraphrase of which is inclosed, that he had informed his Japanese colleague of the nature of our engagements with the French,
With reference to the antepenultimate paragraph of your letter, I am to state that Sir E. Grey sees no reason why French participation should make joint management of the Hankow-Canton and Canton-Kowloon Railways impossible, as the advantage which we possess in the British Chairman having a casting vote would prevent any adverse discrimination from being put into force against us.
In any arrangement, moreover, for joint management of the two railways, provision could doubtless be made for the due protection of the interests of Hong Kong.
In these circumstances I am to express Sir E. Grey's carnest hope that Lord Elgin will not maintain his objections to the communication to the French Ambassador of the proposed Memorandum, the terms of which, while in harmony with the engagement taken by His Majesty's Government, may possibly lead the French Government to recede from their attitude rather than see the abandonment for the present of the scheme for the construction of the line under the auspices in some form of British and French finance,
A copy of the Chinese Central Railways Agreement between the British and French groups is inclosed,† as the one sent on a previous occasion was returned at the request of this Department.
I am, &c.
(Signed)
F. A. CAMPBELL.
* Sir J. Jordan, No. 192, Telegraphic, June 17, 1907. † Chinese Central Railways Agreement, October 2, 1905.
This Document is the Property of His Britannic Majesty's Government.
CHINA RAILWAYS.
CONFIDENTIAL.
34181 [August 26,]
184
[28443]
No. 1.
SECTION 125 SEP 07
Sir J. Jordan to Sir Edward Grey-(Received August 26.)
(No, 327.) Sir,
Peking, July 9, 1907. THE loan negotiations at Wuchang between the Viceroy and Mr. B. G. Hillier have made no advance since my despatch No. 303 of the 25th ultimo was written.
On the 27th ultimo I was informed by His Majesty's Consul-General that the Viceroy still insisted on excluding French participation in the loan, and on the 3rd July I learnt that Herr Cordes, who had left Peking for Wuchang a few days previously, had informed Mr. Hillier that the Viceroy had received orders from Peking to proceed no further with the loan negotiations.
The position of Herr Cordes in this matter was by no means clear. It had been reported in Peking that the German Minister had been making inquiries at the Wai-wu Pu regarding the Wuchang Viceroy's loan negotiations, and it will be recalled that the Germans lay claim to furnish capital to the Viceroy on the strength of an offer made to him by Herr Cordes in 1905.
I proceeded, therefore, to make inquiries of the Wai-wu Pu as to their telegraphic instructions to the Viceroy, and was informed that their only knowledge of the loan negotiations came from outside sources, and went little beyond the bare fact that the Viceroy was endeavouring to raise a foreign loan; they were ignorant of the amount, object, or terms of the projected loan. The Viceroy had not kept the Central Government informed in any way, and they had therefore telegraphed to him that he should not settle with Mr. Hillier before reporting on his proceedings. This step had been taken not, as I had suggested to them, at the dictation of the German Minister, but because of the engagements which had been entered into with regard to the raising of foreign capital for railway construction south and west of Hankow. The Grand Secretary Na Tung then proceeded to rehearse the engagements made in September 1903 by the Wai-wu Pu with this Legation, and in September 1905 by the Viceroy Chang Chih-tung.
The Chinese Government, he continued, fully recognized the binding force of these engagements, but it must be borne in mind that the question of their fulfilment only arose when it had been demonstrated that Chinese capital was insufficient for the enterprises in question. The Viceroy must therefore begin from that starting-point if he desired a loan for railway construction. He must represent to the Government the amount of native capital, if any, at his disposal, and the amount required under loan from abroad. I had informed his Excellency, in the course of conversation, of the lines apon which negotiations had proceeded with the Viceroy, and had touched upon his objection to French participation and his wish to make the loan for public works in Hupei.
As regards French participation, there appeared to be no objection on the part of the Wai-wu Pu, but they declined to express an opinion off-hand as to whether the application by the Viceroy of funds raised nominally for " public works" to railway construction would be approved by the Central Government. As to this point, they could not judge properly till the Viceroy took them into his confidence.
The main points of this conversation were telegraphed by me the same day (5th July) to His Majesty's Consul-General at Hankow, with directions that Mr. Hillier should impress on the Viceroy the necessity of telegraphing fully and frankly to the Wai-wu Pu, and on the 7th instant I learnt from Mr. Fraser that the Viceroy had sent for him and Mr. Hillier, "as he feared that there might be difficulties of legalization of the loan." Mr. Fraser asked further whether, in the event of the Viceroy breaking off negotiations on the plea of participation by the French, he would be justified in suggesting that there might be other British financiers who are free to act alone. Mr. Fraser apprehended that, unless he took some such step, the Viceroy would consider himself at liberty to regard his obligation towards us as discharged.
To this I replied on the same day (7th July) that the Viceroy could hardly maintain his attitude regarding French participation since the Wai-wu Pu offered no objection thereto, and I directed Mr. Fraser to formally assure his Excellency that,
[2622 cc-1]
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