CO129-345 - Public Offices & Foreign Office - 1907 — Page 451

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C.O

[This Document is the Property of His Britannic Majesty's Government

CHINA RAILWAYS.

CONFIDENTIAI.

[36188)

No. 1.

40647

448

REC

R. 19 NC 07 [November 2.]

SECTION 1.

(No. 446.) Sir,

Sir J. Jordan to Sir Edward Grey.-(Received November 2.)

Peking, September 18, 1907. IN continuation of my despatch No. 413 respecting the Tien-tsin-Yang-tsze Railway negotiations, I have the honour to report on the progress of affairs since Mr. Bland's return on the 5th September, and to inclose a copy of a letter which I received from the Chinese negotiator, Mr. Liang, on the 7th September,* asking that Mr. Hillier should continue to represent the British interest in this matter.

While I could not help recognizing the reasonableness of Mr. Liang's request, seeing that the negotiations appeared to be within sight of completion, I could not, in justice to Mr. Bland, urge him to stand aside against his will. I put it to him, however, that he must in any case take matters up at the point reached by Mr. Hillier, and introduce no new questions.

Upon this understanding I wrote to Mr. Liang explaining the position, in the letter dated the 9th September, of which a copy is also inclosed, and I informed Mr. Bland (Inclosure 8)* of the step which I had taken.

In a few days' time Mr. Liang signified his willingness to continue the negotiations with Mr. Bland, though he asked that Mr. Hillier should at least attend the first meeting, which he fixed for the 17th September.

I have thought it worth while to allude to this occurrence, as Mr. Bland attached to it more importance than it deserved. He was undoubtedly much mortified to find on his return that his work was practically done, and was extremely dissatisfied with Messrs. Hillier and Cordes for having yielded so much to the Chinese. When he has given himself time to examine the circumstances which have led up to the present position, he will doubtless realize that Mr. Hillier has acted in the only manner possible under existing conditions.

At the meeting of the 17th September, Mr. Liang stated that further provincial revenues were now forthcoming as security, amounting in all to 3,700,000 tacls out of the 4,000,000 desired by the banks.

Mr. Hillier then introduced an amendment to the clause dealing with the Engineers-in-chief, the method of drawing on the proceeds of the loan, the custody of loan funds, and the keeping of the railway accounts. I have the honour to inclose copy of this amended clause, which appeared to be acceptable to Mr. Liang.

Mr. Bland drew attention to the provision making the Syndicate trustees for the bondholders, a position which he did not consider acceptable under the conditions of this loan. Mr. Liang feared that the absence of such a condition would affect the price of the loan, but admitted the force of Mr. Bland's contention.

This and the question of "commutation" were left for further discussion at the next meeting fixed for the 19th September, when Mr. Hillier will no longer take part in the negotiations. At Mr. Liang's suggestion, the Agreement will then be gone through clause by clause, and it is hoped that the draft will soon assume its final shape. Before separating, Mr. Liang brought forward an extraordinary suggestion emanating from Chang Chih Tung, which is illustrative of that statesman's grasp of financial transactions. This was, in effect, that the loan should be for 7 millions, which was the original sum named, in place of 5 millions, and that the surplus. 2 millions, should be handed over to him (Chang) for the prosecution of his schemes in Hupei.

I have, &c. (Signed) J. N. JORDAN.

* Not printed.

[2728 b-1]