This Document is the Property of His Britannic Majesty's Government.]
665
C.O.
[May 11.]
R
20024
SECTION 1.
FR 6 JUN 08
CHINA RAILWAYS.
CONFIDENTIAL.
(16091)
No. 1.
Sir C. MacDonald to Sir Edward Grey.-(Received May 11.)
(No. 77.) Sir,
Tokyo, April 9, 1908.
I HAVE the honour to acknowledge your despatch No. 48 of the 27th February, transmitting correspondence on the subject of an application by Messrs. Pauling and Co. for a contract to build an extension of the Imperial Railways of Northern China from Hsinmintung to Fakomen, and informing me that, in consequence of objections raised by the Japanese Government on the ground that the construction of such a line would conflict with the agreement arrived at between the Chinese and Japanese Plenipotentiaries in 1905, as to the construction of lines prejudicial to the South Manchurian Railway, His Majesty's Government had informed the firm that they were unable to support them in this matter.
You added that Messrs. Pauling continued to adduce reasons for holding that the proposed extension would benefit, and not injure, the South Manchurian Railway system, and expressed a wish that I should place this view unofficially before the Japanese Government.
Previous to the arrival of your despatch I had already had a letter from Lord Ffrench, Messrs. Pauling's representative at Peking (copy of which I have the honour to inclose), to the effect that his firm had informed him by cable that His Majesty's Government had forwarded me a Memorandum containing some of the reasons put forward by the firm why the Japanese should withdraw their objection to the building of the railway in Manchuria, and that this Memorandum was to be shown by me unofficially to the Japanese Government.
Lord Ffrench forwarded me at the same time a Memorandum bearing on the subject, drawn up by himself. As this document does not contain any additional information to that conveyed in the correspondence which you have forwarded to me, I do not send a copy.
You will observe that Lord Ffrench in his letter makes references to the policy of the open door, and is also of opinion that it is "peculiarly unwise for the Japanese to exhibit unnecessarily such hostility to the interests of British firms." In my reply to this letter, copy of which I inclose herewith, I have not alluded to these observations; but I venture to think that, although they may be natural, coming from a member of a firm which has been disappointed in a possibly lucrative contract, they are hardly fair on the Japanese Government, who, I am sure, have no desire to show unnecessary hostility to any firm, least of all a British firm. Neither do I think that such observations are calculated to serve any useful purpose.
You will see that in my answer to Lord Ffrench I have informed him of the result of two unofficial conversations I have had with Count Hayashi, in which his Excellency, after referring to Article 3 of the Protocol, pointed out that this particular Article (one of sixteen) had been specially drafted in view of the possible extension of the railways of Northern China from Hsinmintung northwards.
When the Chinese authorities made the contract with Messrs. Pauling they knew, or should have known, of this Article. Count Hayashi added that were the Japanese Government to ignore some of the other Articles of the Protocol in the manner in which this one had been ignored by China, it might be very inconvenient for the Chinese. His Excellency regretted very much that the interests of English contractors and financiers should have suffered from the fact that the terms of a solemn compact between Japan and China had been put on one side, but that was not the fault of the Japanese Government.
In my letter to Lord Ffrench I reminded him that His Majesty's Government were of opinion, and had so informed his principals, that the question whether the proposed line would or would not injuriously affect the South Manchurian Railway was one for the decision of the Japanese Government, and that such a position would certainly be assumed by His Majesty's Government if the question arose of the construction of a line competing with a British Railway Concession in China.
I concluded by saying that I would again see Count Hayashi and put before his Excellency a Memorandum containing Messrs. Pauling's arguments to the effect that the extension would benefit and not injure the South Manchurian Railway, and request his favourable consideration of these arguments.
Yesterday I saw Count Hayashi and placed before him the Memorandum above mentioned, copy of which I have the honour
[2972 --1]
}
This Document is the Property of His Britannic Majesty's Government.]
665
C.O.
[May 11.]
R
20024
SECTION 1.
FR 6 JUN 08
CHINA RAILWAYS.
CONFIDENTIAL.
(16091]
No. 1.
Sir C. MacDonald to Sir Edward Grey.-(Received May 11.)
(No. 77.) Sir,
Tokić, April 9, 1908. I HAVE the honour to acknowledge your despatch No. 48 of the 27th February, transmitting correspondence on the subject of an application by Messrs. Pauling and Co. for a contract to build an extension of the Imperial Railways of Northern China from Hsinmintung to Fakomen, and informing me that, in consequence of objections raised by the Japanese Government on the ground that the construction of such a line would conflict with the agreement arrived at between the Chinese and Japanese Plenipoten- tiaries in 1905, as to the construction of lines prejudicial to the South Manchurian Railway, His Majesty's Government had informed the firm that they were unable to support them in this matter. You added that Messrs. Pauling continued to adduce reasons for holding that the proposed extension would benefit, and not injure, the South Manchurian Railway system, and expressed a wish that I should place this view unofficially before the Japanese Government. Previous to the arrival of your despatch I had already had a letter from Lord Ffrench, Messrs. Pauling's representative at Peking (copy of which I have the honour to inclose), to the effect that his firm had informed him by cable that His Majesty's Government had forwarded me a Memorandum containing some of the reasons put forward by the firm why the Japanese should withdraw their objection to the building of the railway in Manchuria, and that this Memorandum was to be shown by me unofficially to the Japanese Government. Lord Ffrench forwarded me at the same time a Memorandum bearing on the subject, drawn up by himself. As this document does not contain any additional information to that conveyed in the correspondence which you have forwarded to me, I do not send a copy. You will observe that Lord Ffrench in his letter makes references to the policy of the open door, and is also of opinion that it is "peculiarly unwise for the Japanese to exhibit unnecessarily such hostility to the interests of British firms." In my reply to this letter, copy of which I inclose herewith, I have not alluded to these observations; but I venture to think that, although they may be natural, coming from a member of a firm which has been disappointed in a possibly lucrative contract, they are hardly fair on the Japanese Government, who, I am sure, have no desire to show unnecessary hostility to any firm, least of all a British firm. Neither do I think that such observations are calculated to serve any useful purpose.
You will see that in my answer to Lord Ffrench I have informed him of the result of two unofficial conversations I have had with Connt Hayashi, in which bis Excellency, after referring to Article 3 of the Protocol, pointed out that this particular Article (one of sixteen) had been specially drafted in view of the possible extension of the railways of Northern China from Hsinmintung northwards. When the Chinese authorities made the contract with Messrs. Pauling they knew, or should have known, of this Article. Count Hayashi added that were the Japanese Government to ignore some of the other Articles of the Protocol in the manner in which this one had been ignored by China, it might be very inconvenient for the Chinese. His Excellency regretted very much that the interests of English contractors and financiers should have suffered from the fact that the terms of a solemn compact between Japan and China had been put on one side, but that was not the fault of the Japanese Govern- ment.
In my letter to Lord Ffrench I reminded him that His Majesty's Government were of opinion, and had so informed his principals, that the question whether the proposed line would or would not injuriously affect the South Manchurian Railway was one for the decision of the Japanese Government, and that such a position would certainly be assumed by His Majesty's Government if the question arose of the construction of a line competing with a British Railway Concession in China.
I concluded by saying that I would again see Count Hayashi and put before his Excellency a Memorandum containing Messrs. Pauling's arguments to the effect that the extension would benefit and not injure the South Manchurian Railway, and request his favourable consideration of these arguments. Yesterday I saw Count Hayashi and placed before him the Memorandum above mentioned, copy of which I have the honour
[2972 --1]
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