CO129-360 - Public Offices - 1909 — Page 680

C.O.

[This Document is the Property of His Britannic Majesty's Governm0492

675

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Rea 25 MAR OC

AFFAIRS OF CHINA.

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CONFIDENTIAL.

[February 22.]

SECTION 2.

1

[7113]

(No. 62.) Sir,

No. 1.

Sir J. Jordan to Sir Edward Grey.-(Received February 22.)

Peking, February 5, 1909. I HAVE the honour to inclose copy of the Memorandum which, as I reported in my telegram No. 37, was sent to the Wai-wu Pu on the 1st February in reply to their Memorandum on the Chinese Engineering and Mining Company's case, a copy of which was transmitted in my despatch No. 463 of the 17th October, 1908.

Copies of the latter document were sent to Major Nathan on the 15th October, with a request for such remarks as he saw fit to make upon the statements contained in it, at as early a date as possible, and while waiting for these I gave the Wai-wu Pu to understand on two or three occasions that, in my view, many of the statements were erroneous, and the conclusions untenable. Major Nathan communicated with his London Board, who declined to take any resolution in the matter of a reply to the Wai-wu Pu's Memorandum until they had a full opportunity of considering it. A draft reply was sent to me on the 18th December by Major Nathan, who begged me to treat it as unofficial for the moment, his Board having instructed him to take no action upon it until they had approved it, and it was not until the 30th January that be informed me that he had received telegraphic instructions enabling him to make official use of it. In the meantime, on the 26th January, Sir Walter fillier called and told me that he was authorized by their Excellencies Na-tung and Liang Tun-yen to ascertain whether a friendly solution of the case could be arrived at, and that he had received permission to sound Major Nathan on the subject. I said I was ready to assist in any possible way, and mentioned that as I was on the point of sending in a reply to the Wai-wu Pu's Memorandum of October, Major Nathan would be coming to Peking and would be asked to see him without delay.

At their first interview on the 30th January Sir Walter informed Major Nathan that he was authorized by their Excellencies Na and Liang to say that they were prepared to discuss the matter in a spirit of compromise, but that it was essential to take as a basis of discussion the Memorandum of the 19th February, 1901, and the acceptance of a Chinese Director or co-Manager as an absolute condition. Major Nathan saw no difficulty in this, but insisted that, if the Memorandum was accepted, the transfer deed (or assignment) must go with it, and that the Lan Chou shaft must be abandoned by the people who were working it. Sir Walter pointed out that the Chinese Govern- ment did not admit that the Company's rights over the Lan Chou mine, and on reference to me I told him that in our view the Company were justified in considering it within the Kaiping area. After much discussion, with the details of which I need not trouble you, some tentative suggestions," drafted by Sir Walter Hillier, were submitted to and approved by his Excellency Liang Tun-yen, and at another meeting yesterday Major Nathan agreed to telegraph them for the consideration of his Board. A copy of Major Nathan's telegram is inclosed for your information.*

In my Memorandum of the 1st February to the Wai-wu Pu, which is based upon Major Nathan's draft of the 18th December and a mass of other documents in the case, I have endeavoured to deal with every important point raised in the Wai-wu Pu's I should explain Memorandum in a way which will be intelligible to Chinese officials. that under 7 I have taken care to let the Company speak for themselves as to the financial arrangements attending the formation of the Company, which are the weak part of their case, and the probable cause of all the trouble from the beginning. There is no concealing the fact that 625,000 out of the 1,000,000 17. shares were issued for a consideration other than cash, and it requires no special knowledge of the financing of industrial Companies to recognize that a transaction of that nature is difficult to explain satisfactorily.

* Not printed.

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