CO129-361 - Public Offices - 1909 — Page 246

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[This Document is the Property of His Britannic Majesty's Government. 944

Inclosure 3 in No. 1.

Consul Goffe to Sir J. Jordan.

My dear Sir John,

Wuhu, February 13, 1909. CHOU HSUEH MING came to see me yesterday afternoon, and had a long talk. He arrived on the 6th, and I sent in my card, and said I proposed to call on him; he replied that he was very busy, and would come and see me as soon as he bad leisure. I have been to see Chou Fu several times lately, and he generally comes and sees me when he comes into town by way of return visit; but the poor old man is feeble and has had a very bad cough all the winter, and has not been able to get out.

I suppose he thought that if his son came that would do instead of his coming.

Chou was very pleasant and communicative, and spoke freely of all his troubles with the gentry. He said they all recognized now that there was nothing to be done with Chinese banks, and they were quite prepared to borrow direct from foreigners. The only difficulty in the way now was the appointment by the lenders of a foreign Engineer. He was himself quite convinced that they could not get foreign money without this condition, but he had not yet succeeded in inducing the gentry to consent to it. It was, however, only a question of time, as they must have the

money.

I gave him Bland's conditions, which I had written out in Chinese for him, and he said they were quite reasonable.

He said they wanted to borrow 3,000,000 taels to complete the present line to Ning Kuo Fu. Once that was done he thought they would be able to get money from Chinese shareholders, but at present they had no confidence in the Company. He said they wanted to borrow this amount, to be repaid in fifteen years. The security he could offer would be a tax on rice and on tea, and an increase on the price of salt of 2 cash per catty. The last point was under consideration of the Viceroy, and he expected it to be approved. The merchants were willing to pay the rice tax if the Company really meant business. He is now engaged in settling these various questions, so as to be in a position to offer security for a foreign loan. He promised to let me know how they got on, so that I could ask Bland to meet them. I am going to Nanking to-morrow, and I am to see him when I come back.

He said that the Auditor's Report, which I sent you yesterday, was entirely a one man's affair and quite useless. I thought so at the time, but I was afraid you might see it in the paper and wonder why I had not sent it to you.

I asked him about the line from Wuhu to Nanking, and he said that the Viceroy had determined to borrow money to build it under Collinson's supervision.

With regard to mines, he said the Peking people were pressing bim to take them over, but he objected that he had no time. As to Tungkuanshan, he said that a good half of the gentry were now in favour of joint Anglo-Chinese working. The opposi- tion came from Anch'ing, and the Viceroy had now summoned a representative of the gentry there to come to Nanking to talk the matter over with him. He asked me to treat this information as private, unless the Viceroy told it me himself. He thought it would help if I did not press for the release of the ore here, as the gentry were annoyed at the Company working without having first bought the land. "I said that was all very well, but they had consistently refused to send a deputy to arrange for the purchase of the land and we had no option. In any case, I said, the land mined was only hill land and did not hurt anybody.

It would do good, he said, if it were made clear what would be the actual position and rights of the Chinese shareholders. I said that I presumed that they would have the usual rights under British Company law, but, of course, the management would have to remain in British hands.

Could the Chinese come in now? Maguire said that the Japanese had up till some time this month to ratify the Agreement, and that if they did not come in by a certain date the offer was off.

I think things look a little more hopeful now both as regards railways and the mine. I am writing to Bland to tell him what Chou said about a loan.

He also said that the line from Ning Kuo Fu to T'un Chi, a distance of 360 li, passed through a very mountainous country and would be expensive to build.

Yours, &c.

(Signed) HERBERT GOFFE.

CHINA RAILWAYS.

CONFIDENTIAL.

[13011]

(No. 143.)

15433

[April 6.]

2600 SEGP 7 MAY OC

SECTION 4.

No. 1.

Sir F. Bertie to Sir Edward Grey,-(Received April 6.)

Sir,

AS I had the honour to report in my telegram No. 54 of to-day's date, the negotia-

Paris, April 3, 1909. tions between the British, French, and German groups with regard to the Hankow- Canton Railway loan were broken off this morning, in view of the continued refusal of the German Delegates to withdraw the German offer to the Chinese Government.

Herr Urbig caused Mr. Addis to be informed last night that the result of such a withdrawal would be the resignation of Mr. Cordes, and that he (Herr Urbig) would be held personally responsible for the consequent loss of German reputation in China. Herr Urbig laid stress on the fact that, in case the British, French, and German groups parted company over this comparatively small loan, the Germans would in all probability obtain the financing of the entire Hankow-Canton as well as the Haukow- Szechuan lines, amounting to a sum of about 22,000,000/.

Although the French Delegates maintained a perfectly loyal attitude towards their British colleagues throughout, Mr. Addis evidently considers that they were much impressed by the force of Herr Urbig's contention, which had been conveyed to them also, and would have given way had they been able to induce Mr. Addis to adopt a similar course.

Before the meeting broke up this morning the German Delegates declared that they would offer no objection to British proference claimed on the score of the 1905 Convention, the effect of which would be merely to leave the British group with the option of the Tien-tsin-Pukow terms for this loan.

Mr. Addis at the close of the meeting announced that a formal protest would be made by the British Representative at Peking against any violation of the 1905 Convention.

I have the honour to transmit to you herewith a copy of a statement which bas, with the approval of the various Delegates, been issued to the press on the subject.

(Signed)

I have, &c.

FRANCIS BERTIE.

Inclosure in No. 1.

Memorandum.

THE meetings recently held in London and Paris between the Representatives of British, French, and German financial groups with the object of arranging for co-operation in respect to railway loans in China including that for the Hankow- Canton Railway have proved abortive.

In accordance with a Protocol signed by the three groups prior to these meetings the British and French groups withdrew their offers to the Chinese for the Hankow-Canton Railway loan.

The German group, however, did not do so, but concluded an Agreement with the Chinese for the loan on terms which did not include those which had been declared by the Protocol to be the minimum terms of control for securing the proper application of the proceeds of Chinese railway loans.

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