CO129-361 - Public Offices - 1909 — Page 521

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basis of the Anglo-German Bank Agreement of 1895 and 1905. This Agreement to be entered into for a fixed period to be agreed.

Approved subject to ratification.

The British and Chinese Corporation (Limited), C. S. ADDIS.

For Chinese Central Railways (Limited),

CARL MEYER.

(Signed)

(Signed) Deutsch-Asiatische Bank,

(Signed)

Banque de l'Indo-Chine,

(Signed)

ST. SIMON.

(2.)

Hankow-Chengtu Railway.

FR. URBIG. ERICH. REHDERS.

Heads of Agreement made at Berlin, May 14, 1909, between Chinese Central Railways (Limited), and the Banque de l'Indo-Chine, representing the French Group.

IT having been agreed between the above parties and the Deutsch-Asiatische Bank representing the German group, that in regard to the Hankow-Chengtu Railway, the chief engineer for Ichang-Hsiangyang-Kuangchui line and the Ichang-Hanyang line to the length of about 800 kilom., is to be appointed by the Deutsch-Asiatische Bank, and that the chief engineer of the extension of the line from Ichang or Hsiangyang to Chengtu is to be appointed by Chinese Central Railways (Limited), it is hereby agreed between the parties hereto, that in respect of the portion of the line for which the chief engineer is to be appointed by Chinese Central Railways (Limited), that Company shall appoint a French engineer for the first section to be constructed of such portion up to about 800 kilom., but not exceeding one-half of such portion, and a British engineer for the second section to be constructed.

(3.)

Chinese Central Railways (Limited),

C. S. ADDIS.

(Signed)

Banque de l'Indo-Chine,

(Signed) ST. SIMON.

Hankow-Chengtu Railway,

Deutsch-Asiatische Bank to Chinese Central Railways (Limited), London.

Dear Sirs,

REFERRING to the two Memoranda of the 15th May, 1909, in reference to the

May 15, 1909. Chengtu line, in the event of that portion of the line which is to be under the French engineer not amounting to about 800 kilom., we hereby declare that we shall offer no objection to a French engineer being appointed to so much of any extension or branch of the before-mentioned portion of the Chengtu line as may be next built as will make up the portion under a French engineer to about 800 kilom.

Yours, &e. Deutsch-Asiatische Bank, (Signed) ERICH,

REHDERS.

C.0.

20427

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

18 JUN

CHINA RAILWAYS.

CONFIDENTIAL

[May 24.]

SECTION 1.

519

[19451]

No. 1.

Sir J. Jordan to Sir Edward Grey.-(Received May 24.)

(No. 168.) Sir,

Peking, April 30, 1909. DURING the week which has elapsed since my despatch No. 160 was written, Mr. E. G. Hillier has continued his efforts to arrive (through negotiations with M. Cordes) at some satisfactory solution of the difficulties connected with the Canton-Hankow Railway Agreement. The modification which, as reported in that despatch, Mr. Hillier sought to introduce into Article 14 of the Tien-tsin-Pukow Agreement was rejected by the Chinese delegates, who, according to M. Cordes, proposed instead to insert a clause stipulating in general terms for the adoption of the practice actually in force on the northern section of the Tien-tsin-Pukow line. This practice was to be embodied in a Memorandum to which reference was made in the Loan Agreement, and a copy of which was to be communicated separately in an official despatch.

M. Cordes represented that the Chinese were not prepared to prolong the negotia- tions unless there was a reasonable prospect of arriving at an agreement, and Mr. Hillier was requested to ascertain at once if this proposal could be accepted in principle.

This he did, and received the natural reply that unless the Memorandum was found to provide for some foreign control of or veto on expenditure of loan funds, the proposal was no improvement on Tien-tsin-Pukow terms and could not be accepted.

Mr. Hillier made an alternative suggestion, which is given in full in the inclosed account of the negotiations addressed by him to Mr. Addis, but this proposal, like those which preceded it, had little chance of acceptance by the Chinese.

As a matter of fact, however, it was never put forward, and the negotiations have entered upon an entirely new phase from to-day. This morning Mr. Hillier received a letter from the delegates, saying that in my last note to the Wai-wu Pu I had indicated him as the British agent for negotiating the terms of the Hankow-Szechuan Agreement and inviting him to meet them in the afternoon for the purpose. It was evident that the real object of the request was to get into direct relations with us in the Canton- Haukow affair, and I therefore advised Mr. Hillier to take advantage of the opportunity to demonstrate to the Chinese negotiators the reasons which made it impossible for us to accept Tien-tsin-Pukow terms as enforced on the southern section of the line. I furnished Mr. Hillier with a statement of these reasons as set forth in my last note to the Wai-wu Pu, and authorized him to say that in the interests of good relations between Great Britain and China it was most undesirable to repeat an experiment which had already caused so much friction and produced so many abuses.

As was anticipated, the delegates plunged at once into the Cantou-Hankow question and made it the main topic of discussion. Mr. Hillier expatiated at length upon the iniquities of the Managing Director on the southern section of the Tien-tsin- Pukow line, and pointed out in detail the various infringements of the Loan Agreement which had been committed. The upshot of the interview, which lasted an hour, was that the delegates came forward with a proposal which had evidently been carefully considered beforehand. It was that clause 14 of the Tien-tsin-Pukow Agreement should be modified by inserting after the word "representative" the words, "who shall, more- over, two days previously, issue in duplicate a certificate particularizing the object of the funds to be drawn, hauding one copy to the bank and one copy to the Auditor."

In addition to this amendment of the Agreement the deputies also stated that they would be prepared to give an official despatch stating that the Auditor would have the right to satisfy himself, by reference to the Managing Director or the Accountant's department, that the requisition was in order, and that if it was found not to be in order the Auditor would inform the bank, who in that case would have the right to withhold payment until the Auditor was satisfied. The delegates added that they were prepared to negotiate the Hankow-Szechuan Railway Loan on the same terms, and asked Mr. Hillier to submit their proposal to his principals by telegraph.

This proposal, as I have stated in my telegram No. 82, appears to me to afford a basis for a satisfactory solution of the question. It gives us what the Tien-tsin-Pukow terms unfortunately failed to give--the right to withhold the loan funds until the Auditor

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