This Document is the Property of His Britannic Majesty's Government.]
# CHINA RAILWAYS.
**CONFIDENTIAL.**
(32669)
No. 1.
[September 21.]
SECTION 1,
C
0.
37616
IRE
10. 15 OCT 08
Sir J. Jordan to Sir Edward Grey.---(Received September 21.)
(No. 354. Confidential.) Sir,
Peking, August 4, 1908.
THE meeting referred to at the close of my despatch No. 341, Confidential, of the 22nd ultimo, on the subject of a Peking-Hankow Railway Redemption Loan, was held on the 27th ultimo, and I have the honour to inclose herewith Mr. Hillier's notes of the discussions.
Mr. Liang Shib-yi stated definitely that the Chinese Government would not agree to control of pledged revenues by the Imperial Maritime Customs in case of default, and that it was impossible to state the objects of the loan, or to mention that portion of it was to be applied to the redemption of the Peking-Hankow Railway. His Excellency explained that the Chinese Government were anxious not to commit themselves to fresh obligations relating to the Imperial Maritime Customs, the future of which was considered to be undecided, and that it was desired on the present occasion to issue a Government loan pure and simple, without restriction of the purposes for which the money was to be spent.
Mr. Liang's authoritative attitude on these two important points appeared to Mr. Hillier to stand in the way of any further progress, and he accordingly telegraphed to his principals in London, recommending a policy of waiting until the Chinese could bring themselves to take a less inflated view of their financial credit. On the 29th ultimo he received a reply stating that both they and the Paris group entirely concurred in his view, and your telegram No. 106, of the 30th ultimo, informed me that the negotiations were broken off.
During the past month a considerable amount of damage has been done to the permanent way of the Peking-Hankow Railway by floods in Hupeh and Honan, and no doubt the earnings will be greatly diminished by the cessation of through traffic, a resumption of which is not yet in sight. These losses appear to have strengthened the position of the Belgian Company, who are able to offer immediate advantages in return for an extension of their contract for five years, and as it is known that the President of the Board of Communications is well-disposed to the Company, it may be that Mr. Liang's attitude is partly due to Belgian inducements.
I should also mention that my French colleague is frankly in favour of a continuance of the Belgian régime, as the best means of preserving the existing French character of the railway, and there is no doubt that, in the present state of the political relations between France and China, in consequence of events on the Tonquin border, the wishes of the French Minister are bound to weigh with the Chinese Government.
I have, &c.
(Signed)
J. N. JORDAN.
Inclosure in No. 1.
Notes by Mr. Hillier of Interview with Liang Shih-yi, July 27, 1908.
THE discussion began with the security. Mr. Liang had not yet prepared a revised list of the provincial revenues to be pledged, but as it would chiefly be a matter of increasing the quotas of the various revenues already allotted, it was not likely to present any difficulty. With regard to the control of the Imperial Maritime Customs in case of default, the Government had definitely decided that they could not agree to it. I asked what was their objection to following the invariable precedent of all previous loans. He replied that the question of the future of the Imperial Maritime Customs was in a state of solution; it was possible that its functions might undergo modification and, while recognizing its previous undertakings as to the administration of
Page 31
[1940 -1]
30
This Document is the Property of His Britannic Majesty's Government.]
CHINA RAILWAYS.
CONFIDENTIAL.
(32669)
No. 1.
[September 21.]
SECTION 1,
C
0.
37616
IRE
10. 15 OCT 08
Sir J. Jordan to Sir Edward Grey.---(Received September 21.)
(No. 354. Confidential.) Sir,
Peking, August 4, 1908. THE meeting referred to at the close of my despatch No. 341, Confidential, of the 22nd ultimo, on the subject of a Peking-Hankow Railway Redemption Loan, was held on the 27th ultimo, and I have the honour to inclose herewith Mr. Hillier's notes of the discussions.
Mr. Liang Shib-yi stated definitely that the Chinese Government would not agree to control of pledged revenues by the Imperial Maritime Customs in case of default, and that it was impossible to state the objects of the loan, or to mention that portion of it was to be applied to the redemption of the Peking-Hankow Railway. His Excellency explained that the Chinese Government were anxious not to commit themselves to fresh obligations relating to the Imperial Maritime Customs, the future of which was considered to be undecided, and that it was desired on the present occasion to issue a Government loan pure and simple, without restriction of the purposes for which the money was to be spent.
Mr. Liang's authoritative attitude on these two important points appeared to Mr. Hillier to stand in the way of any further progress, and he accordingly telegraphed to his principals in London, recommending a policy of waiting until the Chinese could bring themselves to take a less inflated view of their financial credit. On the 29th ultimo he received a reply stating that both they and the Paris group entirely concurred in his view, and your telegram No. 106, of the 30th ultimo, informed me that the negotiations were broken off.
During the past month a considerable amount of damage has been done to the permanent way of the Peking-Hankow Railway by floods in Hupeh and Honan, and no ̈ doubt the earnings will be greatly diminished by the cessation of through traffic, a resumption of which is not yet in sight. These losses appear to have strengthened the position of the Belgian Company, who are able to offer immediate advantages in return for an extension of their contract for five years, and as it is known that the President of the Board of Communications is well-disposed to the Company, it may be that Mr. Liang's attitude is partly due to Belgian inducements.
I should also mention that my French colleague is frankly in favour of a continuance of the Belgian régime, as the best means of preserving the existing French character of the railway, and there is no doubt that, in the present state of the political relations between France and China, in consequence of events on the Tonquin border, the wishes of the French Minister are bound to weigh with the Chinese Government.
I have, &c.
(Signed)
J. N. JORDAN.
Inclosure in No. 1.
Notes by Mr. Hillier of Interview with Liang Shih-yi, July 27, 1908.
THE discussion began with the security. Mr. Liang had not yet prepared a revised list of the provincial revenues to be pledged, but as it would chiefly be a matter of increasing the quotas of the various revenues already allotted, it was not likely to present any difficulty. With regard to the control of the Imperial Maritime Customs in case of default, the Government had definitely decided that they could not agree to it. I asked what was their objection to following the invariable precedent of all previous loans. He replied that the question of the future of the Imperial Maritime Customs was in a state of solution; it was possible that its functions might undergo modification and, while recognizing its previous undertakings as to the administration of
[1940 -1]
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