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stated that in the view of the French Government participation included "general control," and that Sir E. Grey considered that there could be no question of repudiating the participation agreed upon, and inferentially concurred in the meaning placed upon that term by the French Government, subject, of course, to the express stipulation regarding the Chairman.
5. The unfortunate result of these negotiations has been-
(a) In the first place, to produce a "deadlock" and to defer the construction of the railway, which my predecessor had anticipated would be completed simultaneously with the Canton-Kowloon line;
(b) In the second place, to establish certain claims for French control in the line;
(c) In the third place, that the French have demanded British support for a line from Canton to Indo-China and the extension of the Yannau line to Szechuan-both radically opposed to British interests; and
(d) In the fourth place, to bring us into association with the French in China. It was the primary object of the Hong Kong Loan to prevent each of these contingencies, and I have the honour to submit a few remarks upon them.
6. With regard to (a), the delay in construction. The Colony of Hong Kong is spending a sum of approximately 1,000,0007, upon a railway which is useless unless it forms the final link in a great trunk line from Hankow to Peking, and every day's delay in the construction of the Hankow-Canton section is therefore a direct loss to Hong Kong, and, moreover, owing to the growing opposition in China to foreign intervention in railway construction or finance, is daily increasing the difficulties of the position. In such circumstances it would seem that this Colony, owing to the favoured position it had secured by lending the money for the redemption of the line, should rightly be able to exercise the option of making a further loan to give effect to the objects only partially secured by the first. The right to exercise such an option appears, however, to have been taken from it by the pledge given by His Majesty's Government to support French participation.
With regard to (b), French control in the line, even though the Chairman be British, is entirely opposed to the interests of this Colony. This was so fully recognized by your Lordship's predecessor that I need not enter into details.
(c) Nor is it, I think, necessary for me to point out that any incentive to French influence in the Liang Kwang provinces would be viewed as disastrous to British interests in South China and to the interests of Hong Kong in particular; while, with regard to the feeling of the Chinese in this matter, I would remind your Lordship that the Chinese Government has since 1884 been in possession of a brochure by Captain Riviere advocating a quarrel with China as a preliminary to the seizure of the three southern provinces of Kuangtung, Kuangsi, and Yunnan; that it is also aware of the view expressed by M. Doumer, late Governor-General of French Indo-China, in 1905, that "cette zone, de par les accords intervenus entre la France et le Gouvernement Chinois, et on peut dire aussi suivant un consentement unanime, est dans la sphère d'action des entreprises Françaises"; that it is profoundly suspicious of French designs in connection with the railway now under construction between Laokay and Yunnan-fu; and that it has strenuously combated the statement of M. Doumer that France has the right to connect Indo-China with the West River by railroad.
(d) While yielding to none in my desire to promote not merely cordial relations, but common commercial interests with France, I desire to point out to your Lordship that association with the French in China is in the existing state of Chinese feeling towards that nation simply tantamount to a loss of our own hardly won position. The French are, I believe, regarded with intense suspicion and dislike throughout the Empire. The attitude of Chang Chih Tung (formerly Governor-General of the Hukuang and now Councillor of State, whose influence with that of Yuan Shih Kai is predominant in the Councils of China) (with reference to the loan negotiations for the Hankow Railway) is sufficiently significant. He has been desirous of a loan for construction for the last three years, but prefers to delay the whole work rather than to deal with a Company in which the French have any connection whatever. Mr. Clementi, who has recently concluded a journey across China from Turkestan, and who has travelled on several occasions in Yünnan, Szechuan, and the Liang Kuang Provinces, bears evidence to the intensity of this dislike and suspicion. He says that at an interview with him in October 1906 Lung Chi Kuang, by birth a native of Mengtsze, in Yunnan, and at that time Taotai of Liuchou-fu in Kuangsi, but now stationed as Taotai at Lungehou on the Tonquin-Kuangsi frontier, described the feeling of himself and his fellow-provincials towards the French by using the word "hate," and that in crossing Yunnan from east to west in November and December 1906 he noticed the same unpopularity of the French which he had previously remarked upon in paragraphs 45 to 53 of his Confidential Report of a journey from south to north across that province, dated the 21st March, 1902 (forwarded under cover of General Gascoigne's despatch of the 25th June, 1902). In this connection I would also invite your Lordship's attention to the despatch of His Britannic Majesty's Consul at Hanoi to Sir E. Grey, dated the 1st instant, describing the risings and tumults in Annam and Tonquin, which have not been without their effect upon the neighbouring Chinese provinces, for I learn in subsequent telegrams from Mr. Carlisle that the revolutionaries have seized Hokow, the post of the Imperial Maritime Customs on the Tonquin-Yünnan frontier, and have cut the telegraph lines between Tonquin and Mengtsze on the one side and Mengtsze and Yünnan-fu on the other.
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7. I consider it therefore my duty to warn your Lordship in reference to the present proposals of the French that if the British Government accedes to them the result will be (as I am informed) to imperil the confidence at present reposed in us by the Chinese, and to associate the British in schemes which are bound to fail with a consequential loss of prestige, apart from the fact that the scheme of a railway from Canton to Indo-China is entirely opposed to British interests, and I conclude that the extension from Yunnan is equally opposed to Indian and Burman policy.
I have, &c. (Signed) F. D. LUGARD.
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296
2
stated that in the view of the French Government participation included "general control," and that Sir E. Grey considered that there could be no question of repudiating the participation agreed upon, and inferentially concurred in the meaning placed upon that term by the French Government, subject, of course, to the express stipulation regarding the Chairman.
5. The unfortunate result of these negotiations has been-
(a.) In the first place, to produce a "deadlock" and to defer the construction of the railway, which my predecessor had anticipated would be completed simultaneously with the Canton-Kowloon line;
(b.) In the second place, to establish certain claims for French control in the line; (c.) In the third place, that the French have demanded British support for a line from Canton to Indo-China and the extension of the Yannau line to Szechuan-both radically opposed to British interests; and
(d.) In the fourth place, to bring us into association with the French in China. It was the primary object of the Hong Kong Loan to prevent each of these contingencies, and I have the honour to submit a few remarks upon them.
6. With regard to (a), the delay in construction. The Colony of Hong Kong is spending a sum of approximately 1,000,0007, upon a railway which is useless unless it forms the final link in a great trunk line from Hankow to Peking, and every day's delay in the construction of the Hankow-Canton section is therefore a direct loss to Hong Kong, and, moreover, owing to the growing opposition in China to foreign intervention in railway construction or finance, is daily increasing the difficulties of the position. In such circumstances it would seem that this Colony, owing to the favoured position it had secured by lending the money for the redemption of the line, should rightly be able to exercise the option of making a further loan to give effect to the objects only partially secured by the first. The right to exercise such an option appears, however, to have been taken from it by the pledge given by His Majesty's Government to support French participation.
With regard to (b), French control in the line, even though the Chairman be British, is entirely opposed to the interests of this Colony. This was so fully recognized by your Lordship's predecessor that I need not enter into details.
(e.) Nor is it, I think, necessary for me to point out that any incentive to French influence in the Liang Kwang provinces would be viewed as disastrous to British interests in South China and to the interests of Hong Kong in particular; while, with regard to the feeling of the Chinese in this matter, I would remind your Lordship that the Chinese Government has since 1884 been in possession of a brochure by Captain Riviere advocating a quarrel with China as a preliminary to the seizure of the three southern provinces of Kuangtung, Kuangsi, and Yunnan; that it is also aware of the view expressed by M. Doumer, late Governor-General of French Indo-China, in 1905, that "cette zone, de par les accords intervenus entre la France et le Gouvernement Chinois, et on peut dire aussi suivant un consentement unanime, est dans la sphère d'action des entreprises Françaises"; that it is profoundly suspicious of French designs in connection with the railway now under construction between Laokay and Yunnan-fu; and that it has strenuously combated the statement of M. Doumer that France has the right to connect Indo-China with the West River by railroad.
(d.) While yielding to none in my desire to promote not merely cordial relations, but common commercial interests with France, I desire to point out to your Lordship that association with the French in China is in the existing state of Chinese feeling towards that nation simply tantamount to a loss of our own hardly won position. The French are, I believe," regarded with intense suspicion and dislike throughout the Empire. The attitude of Chang Chih Tung (formerly Governor-General of the Hukuang and now Councillor of State, whose influence with that of Yuan Shih Kai is predominant in the Councils of China (with reference to the loan negotiations for the Hankow Railway is sufficiently significant. He has been desirous of a loan for construction for the last three years, but prefers to delay the whole work rather than to deal with a Company in which the French have any connection whatever. Mr. Clementi, who has recently concluded a journey across China from Turkestan, and who has travelled on several occasions in Yünnan, Szechuan, and the Liang Kuang Provinces, bears evidence to the intensity of this dislike and suspicion. He says that at au interview with him in October 1906 Lung Chi Kuang, by birth a native of Mengtsze, in Yunnan, and at that time Taotai of Liuchou-fu in Kuangsi, but now stationed as Taotai at Lungehou on the Tonquin-Kuangsi frontier, described the feeling of himself and his fellow-provincials towards the French by using the word "hate," and that in crossing Yunnan from east to
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west in November and December 1906 he noticed the same unpopularity of the French which he had previously remarked upon in paragraphs 45 to 53 of his Confidential Report of a journey from south to north across that province, dated the 21st March, 1902 (forwarded under cover of General Gascoigne's despatch of the 25th June, 1902). In this connection I would also invite your Lordship's attention to the despatch of His Britannic Majesty's Consul at Hanoi to Sir E. Grey, dated the Ist instant, describing the risings and tumults in Annam and Tonquin, which have not been without their effect upon the neighbouring Chinese provinces, for I learn in subsequent telegrams from Mr. Carlisle that the revolutionaries have scized Hokow, the post of the Imperial Maritime Customs on the Tonquin-Yünnan frontier, and have cut the telegraph lines between Tonquin and Mengtsze on the one side and Mengtsze and Yünnan-fu on the other.
7. I consider it therefore my duty to warn your Lordship in reference to the present proposals of the French that if the British Government accedes to them the result will be (as I am informed) to imperil the confidence at present reposed in us by the Chinese, and to associate the British in schemes which are bound to fail with a con sequential loss of prestige, apart from the fact that the scheme of a railway from Canton to Indo-China is entirely opposed to British interests, and I conclude that the extension from Yunnan is equally opposed to Indian and Burman policy.
I have, &c. (Signed) F. D. LUGARD.
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