CO129-345 - Public Offices & Foreign Office - 1907 — Page 357

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I propose therefore to arrange an early meeting between the parties with a view to reconciling if possible their divergencies of view.

My dear Mr. Liang,

I have, &c."

(Signed)

J. N. JORDAN,

Inclosure 1 in No. 1.

Major Nathan to Mr. Liang.

July 4, 1907. WITH reference to our conversation last night, I have seriously considered what you have said, and do not think that there should be any great difficulty in coming to some agreement on the lines you suggested,

As an idea of what might be done I would suggest the following:-

The Chinese Engineering and Mining Company (Limited) as it stands to-day to be abolished, and the Kaiping coal fields and present mines to be restored to the Imperial Chinese Government.

In order to protect the interests of the present shareholders the following arrange- ments to be made:-

The money at present invested in the Limited Company to be converted into a loan to the provincial authorities for the working of the Kaiping Coalfield and its proper development. The loau might probably be increased in amount by the creation of new shares in the Company, under which circumstances it could be arranged that a proportion of the new shares might be vested in the provincial authorities to increase the share of the provincial revenue above the present amount received in taxation, thus setting a good example for the undertakings of a rich nature and introducing the principle of Govern- ment sharing in the profits obtainable from the mineral resources of the country.

The details of such an arrangement would have to be worked out.

The management of the mines and the property of the old Limited Company to be under the control of a Board of Directors elected by the shareholders, the Viceroy or his Deputy being ea officio a member of the Board and President of the Company. The Board of Directors to have its head-quarters in London. If considered necessary a local Board might be instituted in China to control affairs in China under the general control of the main Board of Directors elected by the shareholders of the loan.

A foreign Manager to be appointed by the shareholders of the loan.

A Chinese Manager to be appointed by the Viceroy to have equal status with the foreign Manager, but not to have control in the financial affairs and arrangements under the loan until redeemed.

The loan to be redeemable by the Chinese Government after thirty years on payment of outstanding share and debenture capital, the former at par value with a bonus of 50 per cent., the latter at par.

If the Chinese Government decides not to redeem the loan after thirty years, the loan will further be redeemable by the Chinese Government after fifty years on payment of the outstanding share and debenture capital, both at par.

These are only my ideas in a somewhat rough form, and I, of course, leave it to you to deal with them as you consider best.

Dear Major Nathan,

Yours sincerely,

.

(Signed) W. S. NATHAN,

Inclosure 2 in No. 1.

Mr. Liang to Major Nathan.

[Undated.]

AS requested, I have been thinking and thinking as how to arrive at a basis that may bring the principals together in respect of the Mining Company.

Inclosed is the result of the endeavours that I have attempted.

If acceptable to you I will see the other parties.

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Inclosure 3 in No. 1.

Principles of Proposals,

THE Kaiping Mining Bureau shall take over the Chinese Engineering and Mining Company (Limited) on the following lines:

The Bureau's capital is to be 1,400,000 shares of 11. each, of which 1,000,000 shall be issued to the Company in exchange for its assets and liabilities and 400,000 shares to the Chinese Government for settlement of Chang Yen Mow and Lanchow Mining Company's claims as it deems fit.

A reasonable portion of the yearly dividend payable on such portion of the 400,000 shares as may be retained by the Government shall be devoted towards accumulating a sinking fund for the redemption of the 1,000,000 shares held by the Company after thirty years.

The Bureau will be managed by four Directors, Chinese Government and Company each appointing two, headed by his Excellency the Viceroy as Director-General. In view of larger number of shares held by the Company, the recommendation of the Company in respect of the financial affairs will always have the due consideration of the Director-General and the Board of Directors.

Royalties, duties, li-kin, &c., are to be paid as usual.

Yours truly,

(Signed)

M. T. LIANG.

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