CO129-360 - Public Offices - 1909 — Page 175

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impossible in the face of the determined oposition of the

gentry and people. The Chinese Government was determined to

avail itself of foreign capital only under conditions which

would obviate all possibility of interference by foreigners

in the affairs of the railways. He thought that a construc-

tion contract would expedite the completion of the line and

was prepared to give the system a trial, but did not wish

this point referred to in the loan agreement. Te desired

to conclude the latter at once, leaving for further consi-

deration the question of a contract, for which no definite

proposals could be forthcoming under two months.

I replied that the Corporation was not prepared to

negotiate the present loan on the basis of the Luhan

redemption agreement; that for the purposes of a prospectus

offering reasonable prospects of success, it was essential

that investors should either be assured of (1) efficient

construction in the hands of well known contractors, or

(2) effective supervision of finances and construction by

British employes of good standing. As the latter condition

seemed unwelcome, it appeared to me that construction by

contract afforded the only immediate solution.

It was,

moreover, unreasonable, I observed, to suggest that Pritish or

French funds would be forthcoming unconditionally and for

the possible benefit of manufacturers of other nationalities

without privilege or benefit to the country supplying the

capital; under no circumstances could China hope to obtain

such terms in any quarter.

After a long discussion it was agreed that Mesrrs.Kao

and Iseng would draw up and send me a memorandum embodying

His Excellency's rough idea of the terms of the loan, which

might serve as a basis for obtaining an expression of opinion,

or a counter proposal, from the Corporation in London.

H.E.