CO129-360 - Public Offices - 1909 — Page 407

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This Document is the Property of His Britannic Majesty's Government.]

405

C. O.

[January 13.] 5944

CHINA RAILWAYS.

CONFIDENTIAL.

[1669]

No. 1.

REC

SECTION 1

TREGE 18 FEB 09

Sir J. Jardan to Sir Edward Grey.-(Received January 13, 1909.)

(No. 576.) Sir,

Pelting, December 23, 1908. I HAVE the honour to transmit to you herewith copy of a despatch from His Majesty's Consul-General at Hankow inclosing a translation of a series of queries which the Viceroy there has addressed to the local gentry and merchants, who are anxious to have the Hankow-Ichang section of the future Szechuan Railway made an unofficial enterprise.

As Mr. Fraser points out, the Viceroy fully exposes the hollowness of the attempts which have hitherto been made by the provinces to finance railway undertakings, and his Excellency's own suggestion to provide funds by an extra assessment on land is not likely to appeal to the rural population who have already had some experience of Government methods in the depreciated currency from which they are suffering so much, and whose daily needs are too pressing to admit of their indulging in visionary schemes of remote profit.

Mr. Fraser has also kept me fully informed from time to time of the various phases through which the Canton-Hankow Railway question is passing. The upper section, from Wuchang to Yochow, which appears to have made a good start under Mr. St. George Moore has received a sudden set-back by orders issued from this by Chang Chih-tung, the result of which is that all work has been absolutely stopped and salaries at the rate of 12,000l. per annum continue to be paid with no return.

On the Hunan section, the British engineer, Mr. Ross, has unfortunately been invalided home, but Mr. Hewlett's reports from Changsha go to show that the Hunanese have at last made up their minds to accept the inevitable and acquiesce in a foreign loan. German intervention promises to introduce a slight complication in this section. A short line of about 13 miles, from Ch'u-chow to Ichia-wan, is to be built this summer in connection with the Ping-hsiang mines in which the Germans are much interested, and negotiations with this object in view are going on between the German manager of the mine and the notorious Shêng Kung-pao, who seems to have secured control of this section from the Hunan Company. I concur, however, with Mr. Fraser in thinking that we cannot well protest as the construction will be carried on by a purely Chinese Company, but, acting upon his suggestion, I have furnished Mr. Bland with full particulars, and asked him to warn the Chinese negotiators that we shall expect this line to be eventually incorporated in the main line.

A much more serious complication, of which my telegram No. 199 of the 12th instant will have informed you, has occurred in connection with the negotiations here. Early in the month, Mr. Gulland, a Scotchman, who is manager of the International Bank at Shanghae, an American concern whose capital is said to be largely Belgian, came to Peking and called upon the American Minister, myself, and Mr. Bland.

Mr. Gulland explained that until recently he had been under the impression that the American money market was not prepared to advance capital to China, and that he was therefore surprised to receive instructions to come to Peking and ascertain the Chinese Government's wishes and proposals regarding the Canton-Hankow line.

I said that if the United States' money market was seriously disposed to embark on Chinese Government loans, British financiers would possibly be willing to renew the friendly relations which formerly existed, but I expressed grave doubts as to bond fide American capital wanting to find an outlet in China at present. China, in my opinion, had been receiving foreign money of late on easier terms than, in view of her financial condition, she had any right to expect and it was as much to her own interest as to that of the foreign investor that railway loans should be accompanied with stricter safeguards.

The American Minister subsequently called upon me to discuss the same question. Mr. Rockhill told me that he was in receipt of telegraphic instructions which had special reference to the Canton-Hankow Railway, and the necessity of securing equality of opportunity for Americau capital in competing with that of other nationalities.

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