CO129-360 - Public Offices - 1909 — Page 691

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

C.O.

10492

CHINA RAILWAYS.

CONFIDENTIAL.

[7860]

No. 1.

RECR (REG 25 MAR 09

686

[February 26.]

SECTION 1.

Memorandum by Mr. C. S. Addis respecting Hankow-Canton Railway Loan Negotiations.— (Communicated by Mr. Addis, February 26, 1909.)

THE present position is as follows:---

1. By an exchange of notes the Governments of England and France have declared themselves opposed to their nationals making railway loans to China unless accompanied by suitable guarantees that the money will be devoted to the object for which the loan was ostensibly raised.

2. The Germans, having been refused participation in the Anglo-French group, are now competing with them for the Hankow-Canton Railway Loan by an independent offer to the Chinese of Tien-tsin--Pukow terms in which the control of the railway funds is vested in the Chinese Director-General.

3. The Anglo-French group are accordingly faced with the alternative of either coming to terms with China by accepting Tien-tsin-Pukow (non-control) terms or of coming to terms with the Germans by admitting them to participation.

4. The German and French groups having both expressed their willingness to enter into a general Anglo-Franco-German understanding in China, the following arrangement is suggested:

The Agreement between the Hong Kong and Shanghac Banking Corporation and the Deutsch-Asiatische Bank to be taken as the basis for an agreement between the British and Chinese Corporation, the Banque de l'Indo Chine, and the Deutsch- Asiatische Bank for all railway loan business which any of the three groups may obtain in China. This Agreement to include the Hankow-Canton Railway.

5. To enable this to be done, the British group agrees to waive the preference on material secured to them by the Anglo-Chinese Convention of 1905.

6. In return for participation, the German group agrees to withdraw their offer to the Chinese and to adhere along with the Anglo-French group to Canton-Kowloon terms of control as a minimum.

7. The Canton-Kowloon terms include--

(a.) Appointment of Engineer to be approved by the lenders. It is understood that France and Germany would not object to the appointment of a British Engineer in the case of the Hankow-Canton Railway. It is suggested that similar concessions might be made in future to other groups where their interests can be shown to predominate.

(b.) Commission to be shared between the three groups as may be hereafter arranged.

(e.) The British preference having been abandoned, an endeavour would be made to substitute a preference to the "lenders," the Chinese retaining, within these limits, the right to purchase railway material in the open market.

London, February 26, 1909.

[2150 ce-]

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