[This Document is the Property of His Britannic Majesty's Government.]
2
Railway, &c., with their Excellencies Li Ching Fong, Yang Shih C'hi, and other high officials, and have offered to undertake the business on reasonable conditions, advantageous alike to the Chinese Government and the local shareholders; but the first condition essential to the introduction of foreign capital for the construction of these, or any other railways, is that the transaction be open and above board, and that the borrowing of funds be formally approved by the Imperial Chinese Government. It is quite useless for any provincial Railway Company or Chinese bank to propose to contract loans abroad for large amounts under conditions which have not received the sanction of the Government, and the sooner this fact is realized the better.
For some years past the Anhui Railway Company has been proclaiming its intention and its ability to construct its provincial railways with purely Chinese capital, as enterprises independent of all Government control. The results, similar to those experienced in Szechuan, Kiangsi, and elsewhere, have not been satisfactory either from the patriotic or the financial point of view, and it is evident that the present condition of affairs cannot be protracted indefinitely,
From your present letter, I gather that the Anhui Railway Company, realizing its position, is prepared to use foreign capital so long as it can save its face by pre- tending to be ignorant of the fact that its agent, the bank, has borrowed abroad. I have had several similar applications from local and provincial Companies, and to all I have considered it my duty to explain that so long as the officials, merchants, and gentry concerned consider that there is any danger or disgrace in borrowing foreign capital, it would evidently be improper and unwise for them to do such a thing, even by roundabout and secret ways; it would be equally imprudent for the Corporation, which I represent, to lend itself to any such methods.
When the Anhui gentry realize that their railways can be built for them more cheaply with foreign capital than with Chinese subscriptions; when accepting this fact, they seek and obtain the Chinese Government's sanction to finance their local enterprises in this way; finally, when they are prepared to afford to foreign capital the necessary safeguards for its proper expenditure and eventual repayment under con- ditions such as obtain, in similar cases, in all civilized countries, then, and not before, will it be possible to interest British financiers in these undertakings.
I have informed the Directors of the Anhui Railway Company that my Corpora- tion is prepared to submit to them an estimate for the cost of the Wuhu line, and any other they may require, naming a fixed price per mile and a definite period of construction. In the event of our estimate being accepted and a loan duly authorized, the Corporation would finance the business, providing funds sufficient to cover the construction contract, purchase of land, rolling stock and other local requirements. In this way, the Anhui Company would obtain the line in the quickest and cheapest manner, and, once built, the Corporation would have no further concern in the matter so long as the interest and principal of the loan were forthcoming at due dates.
Or, if this proposal is not acceptable, I am prepared to discuss any reasonable alternative with any duly authorized and responsible party and to do all in my power to arrange matters on a mutually satisfactory basis. But I am not prepared to con- sider any proposals of the kind you now make, or to accept the seal of Pao Sing Bank as sufficient security for a loan on the London market.
I remain, &c.
(Signed) J. O. P. BLAND.
CHINA RAILWAYS.
CONFIDENTIAL,
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[February 10.]
SECTION 2.
Rece
REGP 12 MAR OS
No. 1.
Sir J. Jordan to Sir Edward Grey.-(Received February 10.)
(No. 31.) Sir,
Peking, January 19, 1909. FROM letters communicated to me by Mr. Bland, copies of which are inclosed for your information, it is evident that the representations made at the Wai-wu Pu, as reported in my despatch No. 571 of the 21st ultimo, effectively quickened the action of the Director-General in regard to the southern section of the Tien-tsin- Pukow Railway.
In his letter of the 29th December, Mr. Tuckey sets out the various causes which have contributed to the delay that has taken place, and endeavours to explain why he did not make known his dissatisfaction sooner to the British and Chinese Corporation. From his letter of the 1st January, I gather that he is better pleased with the turn affairs have taken as the result of a personal visit of the Director-General, his Excellency Lu Hai-huan, to Nanking at the end of the year.
I have, &c. (Signed)
Inclosure 1 in No. 1.
J. N. JORDAN.
Tien-tsin-Pukow Railway (Southern Section) to Mr. Bland.
My dear bland,
Head Office, Nanking, December 29, 1908. I RETURNED from a trip over the line yesterday, and found your letter of the 14th December awaiting me. The of the official statement, which you stated you
copy were going to send me, has not, however, come to hand. Before answering the various questions you asked to be informed about, I must premise that my reason for not bringing the matter up officially before was that until October last matters did not become hopeless. There was considerable delay owing to the Managing Director taking such a long time to come to Nanking, and owing to his constant visits to Shanghae, but it was understood that the absences in Shanghae were necessitated by some railway business that had to be transacted there, and the country being largely under water, and the survey not far advanced, it would have been difficult to start work.
When October came it was possible to start work, and, the conditions remaining bad, I sent in various protests, among which was the report shown you at the head office and another of the same date, which I attach a copy of. I got no answer to either of these, but, as I understood that the Director-General was shortly due here, I hoped that on his arrival matters would be put right. His visit was postponed, and he has only just arrived.
When I protested about the state of muddle prevailing in the head office, I was always given to understand that it was owing to the Director being hampered by instructions from the Director-General, and it was only when I got actual evidence of the progress made on the northern section that I was able to take a really strong position.
The Managing Director is personally a very charming man, and during a trip which I have just had with him over the whole line he has treated me with every courtesy. In the working of the railway, however, he resents my interference in anything practical, and looks on me evidently as a technical adviser, and nothing
more.
In the Loan Agreement there is a clause requiring the Managing Director to consult with the Chief Engineer as regards all technical appointments. The Managing Director holds that that clause refers to foreign engineers only. I have claimed that Chinese surveyors come under that head, and that I should be consulted about their appointment. This claim has been rejected. When I came south alone in April last
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