CO129-360 - Public Offices - 1909 — Page 452

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[This Document is the Property of His Britannic Majesty's Government.] 450

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I observed that the Kulikha-Tengyueh Railway would be a Chinese line built by British engineers, and that the cost of construction might be met by a British loan. Judging by his Excellency's energetic action, opium, the principal staple of Yunnan exports, appeared to be doomed," The present system of mule transport was too expensive to promote trade between Burmah and Yunnan. Unless, therefore, articles of commerce, such as silk, hides, and minerals, could find an easy outlet into Burmah, I feared there was little hope for the prosperity of Yunnan. I was well aware that he cared little or nothing for popular denunciation when once he had set his hand to a task. However, I was able to assert from personal knowledge that the inhabitants of Western Yünnan, so far from opposing railway connection with Burmah, actually favoured it. As far as the financial question was concerned, an arrangement could, I thought, be made for a British loan on suitable security. The Governor-General pressed me for an expression of my opinion as to his views concerning the French railway, but I did not give it. He reminded me that my predecessor, Mr. Wilkinson, had been in frequent correspondence with him for a British railway from Burmah to Yunnan-fu. He had consistently and uncompromisingly refused his assent. The temper of the Chinese people was not what it had been a few years ago, and on that account it had been out of the question to agree to any such railway.

I did not discuss the pros and cons of a British railway from Burmah to Yunnan-fu. I remarked, however, that, in the event of some practical solution of the question of railway connection between Burmah and Yünnan being found in a line from Bbamo to Tengyueh, extensions to Yungchang, Hsiakuan, and Yunnan-fu could be made at a later date, when the prospects of the short line to Tengyueh should have been more or less definitely determined.

The Governor-General questioned me somewhat closely as to the length of the line, the gauge, the estimated cost, the probable earnings and the nationality of the engineering stall. He seemed to be favourably impressed by the moderate estimate of 500,0001. to 600,0001. for a 24-feet line from Kulikha to Tengyueh. He appeared to be strongly opposed to the employment of any but British engineers, and denounced the dissensions between the various French, Italian, Austrian, and Swiss engineers employed on the French railway.

I said that I thought there would be no occasion to use other than British engineers. There was no dearth of Englishmen skilled in railway construction, and, I added, railways all over the world had been and were being built by Englishmen.

The Governor-General, who had at first looked coldly on the project of railway communication between Burmah and Yunnan, appeared subsequently to take some interest in the conversation. He spoke openly and bitterly of the French railway muddle, as he termed it. He asked me point blank why we had co-operated with the French in raising the recent loan for the redemption of the Peking-lankow Railway. He characterized the French railway scheme in Yunnan as the mischievous bobby of M. Doumer. He hinted that we had had arranged with France for a free hand in Thibet in exchange for non-interference with French designs in Yunnan, His little fit of spleen over, his Excellency joined me in laughing at the absurdity of his last remark. Finally, he expressed his intention of consulting the Provincial Railway Board, and said that he would think the matter over on learning their views.

The Governor-General explained that he had talked freely to me because our inter- view was private and in no sense official, I accepted the explanation, and stated that I had no authority from you to put forward or discuss any railway proposals.

I was merely seeking to know his views on a matter which could bring nothing but good to Burmah and Yunnan alike.

I have the honour to state, in conclusion, that I was very guarded in replying to the somewhat pressing demands for my views on the French railway. I venture to believe that my remarks in this connection would not have given offence to the French Consul, if he had been present.

I have, &c. (Signed)

E. C. WILTON.

CHINA RAILWAYS.

CONFIDENTIAL.

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C. O.

6761

[February 2.]

RECE

Rec: 25 09

SECTION 2.

No. 1.

Hong Kong and Shanghae Banking Corporation to Foreign Office.--(Received February 2.)

Dear Sir Francis,

31, Lombard Street, London, February 1, 1909, I INCLOSE, as promised, a copy of the Memorandum submitted to their Foreign Office by the French group, with regard to the Hankow-Canton Railway Loan negotiations.

I

am, of course, not responsible for the Memorandum, but I am not disposed to quarrel with it as a fair statement of the points at issue as seen through French spectacles, although I think they have not quite understood my point with regard to the separation of the financial and the industrial elements of the Loan Agreement. That does not, however, involve any question of principle.

I do not think I mentioned on Saturday what is, perhaps, of some importance, namely, that the German group were apparently prepared to carry their denunciation of the 1898 Protocol to its logical conclusion and to admit that the abolition of the "sphere of interest" in China applied equally to German as well as English spheres.

With regard to the question of the Anglo-German-Trench entente générale in China, my own opinion is that France and Germany having declared their willingness to accept this in principle, the negotiations cannot very well be left to remain as they are, and, speaking for myself, I should have no objection to an Anglo-German-French Agreement, say, on the basis of our present Agreement with the Germans, as regards finance. It is when you come to the industrial branch that the difficulties seem to be almost insurmountable. Supposing a Chinese loan be divided equally between Paris, Berlin, and London; on what principle is it proposed to divide the industrial advantages accruing from the appointment of engineers and the supply of material ? Is it to be by dividing the railway construction into sections, or by geographical division of China into spheres of construction, or by leaving construction open to competition on the understanding that the country securing the contract should share results with its partners in finance?

I confess, for myself, that I find no answer to these difficulties, but I have privately informed a member of each of the two groups, French and German, that if they, ou their side, had any solution to offer, it would receive fair consideration by the British group.

Yours truly, (Signed)

Inclosure in No. 1.

C. S. ADDIS.

Memorandum communicated to the French Foreign Office respecting the Hankow-Canton Railway Loan.

ACTUELLEMENT, en vertu d'un Accord signé à Londres le 18 octobre, 1906, par M. St. Simon et Mr. Addis, un groupe français, représenté par la Banque de l'Indo- Chine, et composé de la Banque de l'Indo-Chine, du Comptoir National d'Escompte de París, de la Société Générale, de la Régie Générale des Chemins de Fer, de la Banque de Paris et des Pays-Bas, et de MM. H. J. and S. Bardac, est associé à la British and Chinese Corporation pour poursuivre l'obtention de la Concession du Chemin de Fer d'Hankéou-Canton.

Tant en vertu de cet "Agreement" qu'en vertu d'un “Memorandum" signé à Paris le 24 février, 1908, il a été entendu que dans le cas où cette Concession serait obtenue, ou dans le cas où un emprunt relatif à ce chemin de fer serait conclu, tous les avantages financiers qui en découleraient seraient partagés par moitié entre le groupe anglais et le groupe français.

Quant aux avantages indirects, pouvant résulter de l'opération, tels que places dans le personnel de la ligne, commandes de matériel, &c., il a été stipulé par le

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