CO129-361 - Public Offices - 1909 — Page 100

2

2. When negotiating for this loan at Wuchang in May 1907, his Excellency Chang informed Mr. Fraser and myself that he was unable to accept the terms proposed by the Corporation because of his engagements to the Yokoliama Specie Bank. (I telegraphed this to my Board on the 20th May, expressing the opinion that no satisfactory conclusion to these negotiations could be expected unless the Japanese could be induced to withdraw,)

3. Mr. Odagiri was present at Hankow during the negotiations conducted first by myself and later by Mr. Hillier, and took no pains to conceal his influence over the Viceroy and his intention to intervene in the negotiations.

4. As the result of protests made by His Majesty's Minister to the Japanese Legation on the 29th May, Mr. Hillier reported that the Japanese had expressed their intention to respect the British Agreement and had notified the Viceroy of their withdrawal. This was immediately followed by a change in the Viceroy's proposals for the loan. Alleging opposition of the gentry to borrowing for railways, he asked for a "general purposes loan, stating at the same time his intention of allotting Japanese contracts to the amount of 4,000,000 taels.

(In other words, Japanese opposition was only "withdrawn " upon their being assured that the British loan would be raised under conditions primarily beneficial to Japanese interests.)

5. On the 22nd October, 1908 (prior to my return from London), his Excellency Chang approached the Hong Kong and Shanghae Bank, suggesting a purely financial loan (5,000,000) for the Hupeh railways. He asked that the matter be treated as urgent. Referred by the bank to the Corporation, and informed

on the 3rd November of our readiness to negotiate forthwith, he allowed the matter to remain in abeyance until the 24th December. Mr. Odagiri arrived in Peking on the 20th, announcing that he had come to pay visits of condolence to Chinese officials,

6. On the 24th December 1 had a first interview with his Excellency Chang and the Yueh-Han Delegates. His Excellency laid stress on the desirability of building the railway quickly, and expressed himself therefore in favour of the construction contract system. He authorized Messrs. Pauling and Co.'s proposal to send out two engineers to prepare and submit an estimate. At the same time he alluded to his obligations to the Japanese and to the presence of Mr. Odagiri in Peking.

7. On the following day Mr. Odagiri saw his Excellency Chang. He had a further interview on the 29th, as a result of which (as I was informed) an agreement was come to as to the conditions under which the railway was to be financed." On the 26th December I reported the facts to His Majesty's Minister and asked for advice. On the 31st December I wrote to my Board that "the successful negotiation of this Loan Agreement would appear to depend upon the nature of the Japanese demands."

8. On the 3rd January the First Secretary of the Japanese Legation, discussing the question with the Peking correspondent of the "Times," stated that there could be no question of giving up the Japanese rights on the Yueh-Han and Szechuan lines; on the contrary, he hoped that Dr. Morrison would use his influence to have Mr. Odagiri recognized (in view of his great influence with his Excellency Chang) as the representative of British finance for those undertakings.

9. On the 4th January Mr. Odagiri called on me to propose that his bank should be allowed to participate in the loan." He professed to ask this "as a favour," and to know nothing of his Excellency Chang's negotiations with the Corporation; he offered no quid pro quo, nor could he give any assurances that the Japanese would recognize British preferential rights in regard to materials, &c. Acting upon the instructions of His Majesty's Minister, I expressed my inability to discuss the matter, and suggested that he and Mr. Ijuin should frankly state to Sir John Jordan their position and claims in the matter.

10. On the 13th January the Yueh-Han Delegates requested me to attend a meeting. On this occasion they sounded me again as to the Corporation's proposals (fully stated on the 24th December) and again promised to send me a Memorandum of their own to serve as a basis for negotiations. They were openly in favour of a construction contract.

(On the same day Mr. Odagiri called on Dr. Morrison to explain that in all his representations to and interviews with his Excellency Chaug his only object had been to support the British and Chinese Corporation. This was confirmed by Mr. Ijuin in conversation with Lord ffrench any myself.)

11. Between the 18th and the 30th January no steps were taken by his Excel- lency Chang to continue the negotiations; but on the 27th I wrote to inform him of

3

the arrival of Messrs. Pauling and Co.'s engineers. On the 30th I had a meeting with the Delegates, who stated that his Excellency Chang had now decided against a construction contract and required a purely financial loan. On the 2nd February I was authorized by His Majesty's Minister to inform them that a purely financial loan would not fulfil his Excellency Chang's obligations to the British Government. On the 11th, for the first time, they put forward their proposals in writing, and at a meeting on the 13th finally declined the conditions which I had been instructed to name as the minimum compatible with recognition of the British preferential rights.

The existing position of affairs is thus brought to a point precisely similar to that reached at the end of May 1907, viz., his Excellency Chang's endeavours to obtain British capital under conditions enabling him to discharge his obligations to Mr. Odagiri have produced a deadlock,

On the 6th instant Mr. Odagiri informed me that he was remaining in Peking until the close of my negotiations with his Excellency Chang,

I remain, &c. (Signed) J. O. P. BLAND.

P.S.---On the morning of the 14th instant I was informed (Chinese sources) that his Excellency Chang had assured the Regent that his loan would be arranged within. the next few days, with the assistance of the Yokohama Specie Bank.

J. O. P. B.

Inclosure 2 in No. 1.

Mr. Bland to Mr. Odagiri.

My dear Mr. Odagiri,

Peking, February 18, 1909. IN view of the assurances given by Mr. Ijuin to Sir John Jordan to the effect that you had not interfered and would not interfere in the British negotiations for the Hankow-Canton Railway, and that the Yokohama Specie Bank was not and would not be concerned in that business, which assurances I requested you to be so good as to confirm to me in writing with a view to preventing further misunder- standing, I desire now to place on record the results of our conversation of this morning.

I understood you to say that you had no knowledge of any such specific assurances having been given by Mr. Ijuin. That you would naturally comply with any instructions which he might give you in the matter, and that if told to abandon all further interest in the loan you would do so. You had, however, received no instructions to this effect, nor had you relinquished your desire expressed to me on the 4th January to participate in the loan. You were not prepared to give any assurance in writing to the Corporation in the matter, being under no obligation to do so; you thought that a general arrangement, such as you had recently discussed with Lord ffrench, would be mutually advantageous, and you would be prepared to discuss its details upou receipt of instructions from Tôkið. You admitted that you had been in communication with the Chinese in regard to the Hankow-Canton Railway loan, but stated that your object had been to assist, and not to impede, our negotiations. You thought that the Chinese would be well advised to accept our terms, and offered, if a general agreement would be reached in regard to your bank's participation, to use your influence with his Excelleney Chang to induce him to accept them. At the same time you repeated that you would be guided by the instructions of your Government and must consult Mr. Ijuin. If the latter desired you to abstain from all further connection with the business, you would drop it.

I trust that the above accurately represents the gist of your statements, and if I have misunderstood you on any point I shall be much obliged if you will correct me.

[2193 y--1]

Yours, &c. (Signed) J. O. P. BLAND.

B 2

98