[This Document is the Property of His Britannic Majesty's Government.]
[B]
C.O.
CHINA RAILWAYS.
15433
[April 13.]
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CONFIDENTIAL.
Pro
SECTION 3.
Saree 7 MAY O
[13618]
No. 1.
Sir E. Goschen to Sir Edward Grey.-(Received April 13.)
(No. 128.) Sir,
Berlin, April 7, 1909. WITH reference to your telegram No. 141 of the 1st April, I have the honour to report that on Saturday last my French colleague and I called upon the Secretary of State for Foreign Affairs and made joint representations to his Excellency on the subject of the proposed Agreement between the German group and the Chinese Government in the matter of the Canton-Hankow Railway Loan.
Upon our telling his Excellency the object of our visit he observed that he feared we were rather late in speaking to him on the subject, as the Preliminary Agreement had been already signed, and he was not at all sure that the Final Agreement had not been signed also. We told his Excellency that as far as our knowledge went this was not the case. We then pointed out to him that it was the opinion of our Governments that an Agreement which neither guaranteed any proper control over the funds nor gave any security that the line would be constructed at all, would, while obviously offering but small advantage to those who brought out the loan, be highly disadvantageous to the dealings of all subsequent negotiators for Concessions, who might feel it their duty to provide investors in these undertakings with some proper security for their money. Herr von Schoen stated in reply that the Imperial Government had no control over the German group now negotiating with the Chinese Government, and that it was their affair if they conducted their business on terms which were not to their advantage. The Imperial Government never interfered in such matters. As, however, we appeared to wish that he should do something, he would see the Directors of the bank interested in the loan and ask them how matters stood. We said that we wished him to go farther than a mere inquiry, which from our point of view would not be of great use. What we hoped was that he could press the banks to abandon, or at all events defer, the signature of an Agreement which could not fail to exercise a bad influence on all future financial and trade negotiations between foreigners and the Chinese Government, and which would, moreover, have the deplorable result of encouraging the latter to pursue in such negotiations the policy of playing off one Power against another. It was to the interest of all foreign Powers alike that one-sided Agreements such as would lead to that deplorable result should be avoided. We argued on these lines for some time, but at the close of our conversation we noticed no disposition on Herr von Schoen's part to exercise any pressure whatever on the Directors of the bank.
As I had no opportunity at the time to make a separate and unofficial com- munication in the sense of the last two paragraphs of your telegram under reference, and as I was unable to obtain an interview with him on the following day, I wrote a private letter to him in the sense of your instructions. I should have preferred to have spoken to him on the subject, but it seemed to me important that he should receive the information in question before he saw the Directors of the bank.
I saw Herr von Schoen again to-day and renewed my request that the Imperial Government would use their influence to prevent the signature of the Agreement. I also called his attention to the telegraphic account published in the "Times" of the Paris meeting, and asked him whether there was any truth in the statement attributed to one of the German representatives that "the German Government would not allow them to withdraw from their engagement with the Chinese Government even if they were willing to do so.” Herr von Schoen replied that there was no truth in that state- ment. It came out, however, in the course of conversation that the Directors of the bank interested in the loan liad consulted the Imperial Government with regard to the Agreement and had asked whether it was the wish of the Government that they should withdraw from it. The reply of the Government had been that they could not possibly advise them to break any engagement they might have entered into
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