CO129-361 - Public Offices - 1909 — Page 199

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paying this money away to the provincial Companies. This is much to be deplored, as we had relied on the two bureaux in question ultimately running short of funds to bring them to reason."

On the 21st January I wrote officially to his Excellency Liang requesting that the resignation of the Managing Director and the consequent chaos in the affairs of the railway should be treated as a matter of urgency in order that the work of construction might proceed in accordance with the Loan Agreement. Referring to this question at the Yuchuan Pu on the 14th instant, his Excellency informed me that, owing to the recent impeachment of the President and other members of the Board, no steps could be taken in the matter, and he had therefore no reply to make to my letter. I au reporting accordingly to my Board.

Sir,

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

Inclosure 2 in No. 1.

Sir J. Jordan to Mr. Bland.

Peking, February 24, 1909, WITH reference to your letter of yesterday, I agree that Mr. Foord's name cannot properly be mentioned, but it appears to me also that I am hardly entitled to use Mr. Barry's name in the way suggested without his authorization.

The immediately important matter is apparently to prevent the Board of Com- munications from making irregular use of the loan funds, and as regards this, I under- stand that the Hong Kong and Shanghae Bank are advised by counsel that, not being a party to the Loan Agreement, they cannot refuse payment of orders drawn in accordance with Article 14. But I have gathered that, in the view of yourself and Mr. Hillier, the requisitions presented by his Excellency Liang Shih-yi through the Chiao-tung Bank on the 31st December were grossly inadequate, and in no way complied with the certificate of the Managing Director intended by Article 14, and I have so informed the Wai-wu Pu. It would seem then that, if the Hong Kong and Shanghae Banking Corporation hold the same views as yourself and Mr. Hillier, it is possible for them to refuse payment of irregular requisitions similar to those presented on the 31st December. In any case the British and Chinese Corporation are a party to the Loan Agreement, and it is open to them to adopt the usual legal steps to restrain the bank from parting with the funds otherwise than in accordance with the letter and spirit of the Agreement, and it seems to me desirable in the present circumstances that measures to that end should be taken into consideration without delay.

I am, &c.

(Signed) J. N. JORDAN.

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

C.O. 15128

PEOP Rro

MAY 09

CHINA RAILWAYS.

CONFIDENTIAL.

[March 24.]

SECTION 3.

197

(11419]

No. 1.

Notes on Letter from the Deutsch-Asiatische Bank of March 20.--(Communicated by Mr. C. S. Addis, March 24, 1909.)

Clause 1.

Sub-section 1.-This appears to be in accordance with the terms agreed upon in

London.

Sub-section 2.—The Deutsch-Chinesische Eisenbahn-Gesellschaft is substituted for the Deutsch-Asiatische Bank and a Railway Syndicate to be formed by the Banque de Pludo Chine is substituted for the Banque de l'Indo Chine. If the Deutsch- Chinesische Eisenbahn-Gesellschaft represents the group of banks specified in the First Schedule to the draft Agreement, and the Syndicate to be formed by the Banque de l'Indo Chine represents the group of French banks whose names it was intended to set out in the second Schedule that involves no alteration of substance, but it may be doubted whether this is the intention. It may be that the group of German banks are all shareholders in the Deutsch-Chinesische Eisenbahn-Gesellschaft, but that would not, of course, give that Company any right to represent and bind such banks. The same observations apply to the Syndicate to be formed by the Banque de l'Indo Chine.

The representatives of the British and Chinese Corporation (Limited) and Chinese Central Railways (Limited), having considered the above suggest that the German and French groups should be asked to produce the Agreements existing, or to be entered into, between themselves and their respective Railway Syndicates which would no doubt show that all the associated banks have agreed to be bound by any Agreements entered into in regard to China by such Railway Syndicates.

Clause 2.

Sub-section (a).-That the railways in the Province of Shantung should be excepted from the Agreement was neither suggested nor agreed. The sub-section also in fact ignores the exclusion of the Pukow-Sinyang Railway upon which Chinese Central Railways (Limited) from the first insisted and which both the British and French groups agreed according to the Minutes of the 12th March, 1909, should be excluded.

The representatives of the British and Chinese Corporation (Limited) and Chinese Central Railways (Limited) having considered the above point out that in regard to the Pukow-Sinyang Railway it was agreed that this should be excluded and that this must be insisted upon, but that they would be prepared to consent to the exclusion of the railways within the Province of Shantung.

Sub-section (b).--According to the draft Agreement of the 15th March, 1909, it was provided that the appointments of Engineer-in-chief were to be made alternately except where the interests of any other group could be shown to predominate, and this was accepted in principle. If this is adhered to and the German group can show that in the case of the Techou-Chengtingfu and Yenchoufu-Kaifeng lines (which are brought into the question for the first time) that German interests predominate they would be entitled to German Engineers for those two lines.

The representatives of the British and Chinese Corporation (Limited), and Chinese Central Railways (Limited), having considered the above refer to Article 10, sub-section (a), of the Railway Agreement, and suggest that as it is provided there that ns where the interest of any group can be shown to predominate that group should appoint the Engineer, this would cover the claim of the German group to German Engineers in the case of the Techou-Chengtingfu and Yenchoufa-Kaifeng lines if such predominance can be established. They suggest, therefore, that there is no necessity for such stipulation.

[2193 aa--)

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