This Document is the Property of His Britannic Majesty's Government.)
# CHINA RAILWAYS.
**CONFIDENTIAL.**
10573 [January 31.]
153
Secrid 25 MAR 08.
[3456]
No. 1.
Sir,
Messrs. Pauling and Co. to Foreign Office.-(Received January 31.)
26, Victoria Street, London, January 30, 1908.
WITH reference to the interview held by Mr. C. Somers Cox with Mr. Percy Browne in connection with the Hsinmintun-Fakumen Railway, we have the honour to inform you that it was by our instructions that the latter gentleman, since Lord ffrench's departure for China, has seen you on various occasions on the subject-matters of cables received from Lord ffrench regarding the above railway.
Mr. Percy Browne is an intimate friend of Lord ffrench, and has been known to our firm for many years, and, with your permission, we should be glad to continue to avail ourselves of his services in calling upon you and discussing Chinese railway matters with you on our behalf.
We need hardly say, however, should matters arise requiring official action to be taken, Mr. George Pauling, of our firm, would himself call upon you.
May we take this opportunity of bringing to your notice that the Agreement made by the Chinese Government with our firm regarding the above-named railway is the first occasion on which British contractors have obtained the offer of direct employment from the Chinese Government, not as concessionnaires or would-be concessionnaires, but simply as contractors to carry out public works required by the Chinese Government, and that, therefore, it will create, in our opinion, a most serious precedent if the Japanese Government be now allowed to dictate to the Chinese Government with the object of preventing contracts granted to British subjects from being carried out?
We have been informed categorically by Lord ffrench, who is acting in this matter in co-operation with the representatives of the British and Chinese Corporation and the Hong Kong and Shanghai Bank, of the following material facts, which, we respectfully think, will be deemed by you as throwing a new light on that portion of the Japanese protest which is based upon their allegation that the Hsinmintun-Fakumen line would be a competitor with their South Manchurian Railway.
The town of Fakumen has a population of 40,000 people; the whole district is closely cultivated; and, owing to the fact that the Liao River is deep and unfordable, and forms a natural traffic boundary, shutting off this district from the Japanese Manchurian railway system, the trade of this district goes by road exclusively to Hsinmintun, the nearest railway terminus. The substitution of railway transport for road transport surely cannot be regarded as forming a competition! This allegation, therefore, by the Japanese that the construction of this extension from Hsinmintun to Fakumen constitutes the creation of a competing line to their South Manchurian system must be held to be groundless.
As will be known to you, a line is to be constructed by the Chinese from Hsinmintun to Mukden. All the new traffic that will be brought down from the Fakumen district to Hsinmintun by rail instead of road must there be distributed—in what proportions it is impossible to say, but unquestionably a considerable proportion will pass thenceforth from Hsinmintun to Mukden, and so over the Japanese Manchurian system. Indeed, the Fakumen extension will become a contributor or feeder to the Japanese system.
The above facts tend strongly, in our opinion, to show that the Japanese protest is really based upon their adoption of a policy of railway exclusion, very much the same as animated the Russian Government before the late war.
The perusal also of the clause in the informal arrangement, alleged by the Japanese to have been signed in 1905-6, clearly indicates that, if there was a stipulation, it was strictly limited to the non-construction of a competing line in Manchuria. From the arguments set forth above, we think we have established the fact that the Hsinmintun-Fakumen extension will not constitute a competing line, but, on the contrary, a contributing line, to the traffic of the Japanese Manchurian system. And, if this be so, the construction of this extension is in no way forbidden by the 1905 Treaty nor by the alleged informal arrangement; and our firm, as British subjects, having obtained the contract for this construction from the Chinese Government,
[2815 hh-1]
This Document is the Property of His Britannic Majesty's Government.)
CHINA RAILWAYS.
CONFIDENTIAL.
10573 [January 31.]
153
Secrid 25 MAR 08.
[3456]
No. 1.
Sir,
Messrs. Pauling and Co. to Foreign Office.-(Received January 31.)
26, Victoria Street, London, January 30, 1908. WITH reference to the interview held by Mr. C. Somers Cox with Mr. Percy Browne in connection with the Hsinmintun-Fakumen Railway, we have the honour to inform you that it was by our instructions that the latter gentleman, since Lord ffrench's departure for China, has seen you on various occasions on the subject-matters of cables received from Lord ffrench regarding the above railway.
Mr. Percy Browne is an intimate friend of Lord ffrench, and has been known to our firm for many years, and, with your permission, we should be glad to continue to avail ourselves of his services in calling upon you and disenssing Chinese railway matters with you on our behalf.
We need hardly say, however, should matters arise requiring official action to be taken, Mr. George Pauling, of our firm, would himself call upon you.
May we take this opportunity of bringing to your notice that the Agreement made by the Chinese Government with our firm regarding the above-named railway is the first occasion on which British contractors have obtained the offer of direct employment from the Chinese Government, not as concessionnaires or would-be concessionnaires, but simply as contractors to carry out public works required by the Chinese Government, and that, therefore, it will create, in our opinion, a most serious precedent if the Japanese Government be now allowed to dictate to the Chinese Government with the object of preventing contracts granted to British subjects from being carried out?
We have been informed categorically by Lord ffrench, who is acting in this matter in co-operation with the representatives of the British and Chinese Corporation and the Hong Kong and Shanghac Bank, of the following material facts, which, we respect- fully think, will be deemed by you as throwing a new light on that portion of the Japanese protest which is based upon their allegation that the Isinmintun-Fakumen line would be a competitor with their South Manchurian Railway.
The town of Fakumen has a population of 40,000 people; the whole district is closely cultivated; and, owing to the fact that the Liao River is deep and unfordable, and forms a natural traffic boundary, shutting off this district from the Japanese Manchurian railway system, the trade of this district goes by road exclusively to The substitution of railway transport for Hsimintan, the nearest railway termiuus. road transport surely cannot be regarded as forming a competition! This allegation, therefore, by the Japanese that the construction of this extension from Hsinminium to Fakumen constitutes the creation of a competing line to their South Manchurian system must be held to be groundless.
As will be known to you, a line is to be constructed by the Chinese from Hsiu- mintun to Mukden. All the new traffic that will be brought down from the Fakumen district to Hsinmintau by rail instead of road must there be distributed-in what proportions it is impossible to say, but unquestionably a considerable proportion will pass thenceforth from Hsinmintun to Mukden, and so over the Japanese Manchurian system. Indeed, the Fakumen extension will become a contributor or feeder to the Japanese system.
The above facts tend strongly, in our opinion, to show that the Japanese protest is really based upon their adoption of a policy of railway exclusion, very much the saine as animated the Russian Government before the late war.
The perusal also of the clause in the informal arrangement, alleged by the Japanese to have been signed 1905-6, clearly indicates that, if there was a stipula- tion, it was strictly limited to the non-construction of a competing line in Manchuria. From the arguments set forth above, we think we have established the fact that the Hsinmintun-Fakumen extension will not constitute a competing line, but, on the contrary, a contributing line, to the traffic of the Japanese Manchurian system. And, if this be so, the construction of this extension is in no way forbidden by the 1905 Treaty nor by the alleged informal arrangement; and our firm, as British subjects, having obtained the contract for this construction from the Chinese Government,
[2815 hh-1]
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